The federal government spent $1.170 trillion servicing the national debt in the first 10 months of fiscal year 2026, according to Treasury data for the month ended July 31. That is $152.7 billion more than the same stretch of fiscal 2025, an increase of 15 percent, and it already exceeds the $1.133 trillion the government paid in interest across all 12 months of fiscal 2024. Treasury recorded $117.6 billion of interest expense in July alone. The figure covers every category of federal borrowing, from the amortized discount on Treasury bills to the inflation compensation owed on inflation protected securities. It arrives with the total national debt at $39.89 trillion as of August 6 and the average rate Treasury pays on its marketable securities at 3.443 percent, the highest monthly reading in more than a decade. Two months remain in the fiscal year, which ends September 30. The pace matters because interest is now the fastest growing line in the federal budget, it competes directly with every other spending priority, and the rate Treasury pays is set in the same bond market that prices your mortgage and your savings account. Our interest on the national debt tracker follows the monthly series.
- Interest on the public debt reached $1.170 trillion in the first 10 months of fiscal 2026.
- That is $152.7 billion above the same period last year, a 15 percent increase.
- Fiscal 2026 has already passed the full year fiscal 2024 total of $1.133 trillion by $37 billion.
- Treasury pays an average 3.443 percent on marketable debt, up from 3.411 percent in June.
- The prime rate holds at 6.75 percent. The next Fed decision comes September 15 to 16.
What Treasury’s July Interest Data Shows
Treasury’s interest expense series breaks the bill into parts, and the parts explain where the money goes. Accrued interest on Treasury notes is the single largest line at $410.5 billion for the fiscal year to date. Amortized discount on Treasury bills, the cost of the short term paper Treasury rolls over constantly, comes next at $209.2 billion. Accrued interest on Treasury bonds adds $147.1 billion. Inflation compensation owed on Treasury inflation protected securities contributed $76.9 billion, a figure that rises and falls with the consumer price index rather than with Fed policy. Interest paid into government account series holdings, the securities held by trust funds such as Social Security, added $184.6 billion.
The monthly numbers are lumpy by design. Treasury paid $185.2 billion in June and $117.6 billion in July, and the gap has nothing to do with a change in policy. Notes and bonds pay coupons twice a year on fixed dates, so months holding heavy coupon dates carry a much larger accrual than months that do not. Reading a single month tells you very little. The fiscal year to date total is the number that matters, and it has now crossed $1.17 trillion with August and September still to be counted. For context on how that debt is distributed across maturities and holders, see our national debt hub.
Why the Bill Grew $152.7 Billion in a Year
Two forces drive the increase, and only one of them is under anyone’s control in the short run. The first is the size of the balance. Total public debt outstanding stood at $39.89 trillion on August 6, and every dollar Treasury adds has to be financed at whatever the market charges that week. The second is the rate on the stock of debt. Treasury reported an average interest rate of 3.443 percent on total marketable securities for July, up from 3.411 percent in June. That climb of roughly three basis points looks small, but it applies to a balance measured in tens of trillions, and it compounds with every month of new issuance.
The composition of that average tells the more interesting story. Treasury bills carried an average rate of 3.758 percent in July, higher than the 3.309 percent on notes and the 3.442 percent on bonds. Bills carry a higher average cost per dollar than bonds because they reprice at current market rates every few months, while the note and bond stock still holds older securities issued at much lower coupons. Floating rate notes cost 3.948 percent, the most expensive marketable category Treasury reports. Every low coupon security issued during the 2020 and 2021 era that matures now gets replaced at current market rates, which is why the average keeps drifting up even in months when new borrowing slows. You can follow the maturity structure on our Treasury yield curve page.
Where Fiscal 2026 Lands by September 30
Fiscal 2025 finished at $1.220 trillion. Fiscal 2026 sits $50.0 billion below that with two months left, so the record will fall in August. The arithmetic on the full year runs two ways and both point to the same neighborhood. Treasury recorded $202.7 billion of interest expense in August and September of fiscal 2025. Adding that same amount to this year’s total produces $1.373 trillion. Applying this year’s 15 percent growth rate to those two months instead produces $1.403 trillion. A simple 10 month run rate of $117.0 billion carried across 12 months lands at $1.404 trillion.
These are projections built from published Treasury data, not official forecasts, and the actual figure depends on August and September coupon dates and on the inflation compensation accrued on inflation protected securities. The broader budget picture is already strained. The Congressional Budget Office estimated in July that the federal deficit reached $1.4 trillion in the first nine months of fiscal 2026, about $35 billion above the same period a year earlier, with revenues up $142 billion and outlays up $178 billion. Interest is a large share of that outlay growth, and unlike most spending it cannot be appropriated down. It is contractual. Our federal spending and revenue tracker sets the totals side by side.
What This Means for Your Money
A rising federal interest bill does not reach your wallet through a single channel, and the connection is easy to overstate. Your credit card and home equity line move with the prime rate, which sits at 6.75 percent and changes only when the Federal Reserve moves its policy rate. Treasury’s borrowing cost has no direct effect on that. What Treasury’s supply does influence is the long end of the yield curve. The 30 year Treasury yield closed at 5.22 percent and the 10 year at 4.69 percent on August 6, and the 10 year is the benchmark most closely tied to fixed mortgage pricing.
Heavier issuance tends to require higher yields to clear, which puts gentle upward pressure on mortgage rates over time. The same dynamic works in savers’ favor. Elevated Treasury yields keep deposit competition alive, so certificate of deposit rates and high yield savings rates stay meaningfully above where they sat before 2022. Borrowers on variable rate products should watch the Fed rather than Treasury, and the current prime rate is the number that governs their payment. Anyone shopping a fixed rate loan should watch the 10 year and 30 year yields, because those are where a widening federal interest bill shows up first.
If you hold cash, the government’s borrowing cost is your yield opportunity. Treasury bills averaged 3.758 percent in July, and interest on Treasury securities is exempt from state and local income tax, which raises the effective return for anyone in a high tax state. Compare that after tax figure against your bank’s 12 month certificate before you commit. If you carry a variable rate balance instead, the 6.75 percent prime rate is your number, and it will not change before the September 15 to 16 Fed meeting.
Frequently Asked Questions
How much does the U.S. pay in interest on the national debt?
The United States paid $1.170 trillion in interest on the public debt during the first 10 months of fiscal year 2026, the period from October 1, 2025 through July 31, 2026, according to Treasury’s published interest expense data. July alone accounted for $117.6 billion. That 10 month total is 15 percent higher than the same period a year earlier and already exceeds the $1.133 trillion paid across all of fiscal 2024. Treasury updates the figure monthly, and the fiscal year closes on September 30.
How much of the national debt does each American carry?
The total public debt outstanding was $39.89 trillion on August 6, 2026, and the per person share is simply that balance divided by the resident population, a figure that shifts every business day as Treasury issues and redeems securities. The useful comparison is not the headline share but the interest share, because interest is what taxpayers actually fund each year through the budget. Our debt per person tracker runs the current division and updates it against the daily Treasury balance.
Does the government’s interest bill raise the rates I pay?
Indirectly, and only on fixed rate products. Treasury competes for the same pool of savings that funds mortgages and corporate bonds, so heavier federal borrowing tends to lift long term yields, and the 10 year Treasury at 4.69 percent is the anchor for 30 year mortgage pricing. Variable rate debt works differently. Credit cards and home equity lines track the 6.75 percent prime rate, which follows the Fed’s policy decisions and is unaffected by how much Treasury owes or what it pays.
Why did federal interest costs rise 15 percent in a year?
Both the balance and the rate went up at once. Total debt outstanding reached $39.89 trillion, and the average rate Treasury pays on marketable securities climbed to 3.443 percent in July from 3.411 percent in June. The larger effect is refinancing. Securities issued in 2020 and 2021 at very low coupons keep maturing and get replaced at today’s market rates, so the average cost of the whole stock rises even during months when net new borrowing is modest. That repricing runs for years.
Would a Fed rate cut lower the interest bill right away?
Only partly, and slowly. A cut would reduce what Treasury pays on newly auctioned bills, which averaged 3.758 percent in July and roll over within a year, so relief there appears within months. Notes and bonds already outstanding carry fixed coupons that a Fed decision cannot change. Roughly speaking, the short end reprices quickly and the long end does not. The Federal Open Market Committee holds its next meeting on September 15 and 16, and it left the target range at 3.50 to 3.75 percent in July.
When will Treasury report the next interest figure?
Treasury publishes the interest expense series monthly, a few business days after each month closes, so the August figure lands in early September and the fiscal year 2026 final total arrives in early October. The Congressional Budget Office also issues a Monthly Budget Review with its own estimate of net interest outlays. Separately, the Federal Reserve releases the minutes of its July 28 and 29 meeting on August 19, which will show how officials weighed inflation against a softening job market.
Watching the Final Two Months of Fiscal 2026
Fiscal 2026 will set a record for federal interest expense sometime in August, and the only open question is the size of it. The two numbers to track are the average rate Treasury reports at each month end and the pace of new issuance, because together they set next year’s baseline. Readers who want the running totals can follow our interest on the national debt page, the debt to GDP ratio tracker, and the Fed rate forecast for what comes next.
References
- U.S. Department of the Treasury, Fiscal Data, Interest Expense on the Public Debt Outstanding, record date July 31, 2026.
- U.S. Department of the Treasury, Fiscal Data, Debt to the Penny, record date August 6, 2026.
- U.S. Department of the Treasury, Fiscal Data, Average Interest Rates on U.S. Treasury Securities, record date July 31, 2026.
- Congressional Budget Office, Monthly Budget Review: June 2026, published July 9, 2026.
- Board of Governors of the Federal Reserve System, H.15 Selected Interest Rates, August 6, 2026.
- Board of Governors of the Federal Reserve System, Calendar: August 2026, release schedule.
- Federal Reserve Bank of St. Louis, FRED, 30-Year Treasury Constant Maturity Rate, observation August 6, 2026.
