(MENAFN) The US federal budget deficit expanded to $284 billion during October, marking the opening month of the 2026 fiscal year, representing a 10% year-over-year increase compared to the corresponding period last year, according to Treasury Department data released Tuesday.

The latest figures reflect growing fiscal pressures as government expenditures continue outpacing revenue collection despite robust income growth across multiple tax categories.

During fiscal year 2025, the government recorded a budget deficit of approximately $257 billion in the same October timeframe, establishing a baseline for measuring the current year's deteriorating fiscal position.

Government revenues demonstrated impressive growth momentum, surging 24% year-on-year to reach $404 billion in October, driven by stronger tax collections and enhanced enforcement measures. However, spending escalated even more rapidly, climbing 18% to $689 billion during the month, reflecting increased outlays across defense, social programs, and debt servicing obligations.

Despite October's concerning deficit expansion, the broader annual picture showed modest improvement. The deficit declined 2% on an annual basis to $1.775 trillion throughout the complete 2025 fiscal year, representing a marginal reduction in the government's borrowing requirements.

Record-high tariff revenues played a significant role in offsetting some spending increases and contributed substantially to the overall deficit reduction over the full fiscal year, the official data demonstrated. Trade policy measures implemented during the period generated unprecedented customs duties and import taxes.

Fiscal analysts continue monitoring whether tariff income sustainability can offset mounting spending pressures and rising interest costs on the expanding national debt in coming months.

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