US budget deficit shrinks in August, year-to-date flat at $1.97 trillion

Unadjusted August receipts were up $16 billion, or 5%, to $360 billion. This included a $12.84 billion inflow of net customs receipts, the first uptick since April, after tariff refunds totaling $10.54 billion for the month, about a third of the July refunds total of $33.38 billion.

In February, the Supreme Court ruled the Trump administration did not have the legal authority to collect tariffs under the International Emergency Economic Powers Act as it had been doing for nearly a year. The Trump administration moved promptly to impose levies under other authorities. Year to date, the Treasury has collected $292.5 billion in customs duties, even as it has had to refund about $125.2 billion, resulting in a net inflow of $167.3 billion.

The U.S. federal budget deficit for August shrank to $167 billion due largely to some calendar shifts in benefit payments rather than any underlying trend, leaving the fiscal-year-to-date budget gap essentially flat at $1.97 trillion, the U.S. Treasury said on Friday.

The budget gap for the 11 months through August exceeds the full-year fiscal 2025 deficit of $1.775 trillion. For August alone the budget gap was down from a year earlier, but that was largely due to the fact that August 1, 2026 was a Saturday, meaning that Medicare and social security payments normally paid on the first of the month were made instead in July.