GAO Audit Puts National Debt at $40.2 Trillion as Interest Costs Reach $1.4 Trillion

Interest payments on the national debt totaled $1.4 trillion in fiscal 2026, a Government Accountability Office audit released this week found. Roughly $1.1 trillion of that amount went to outside bondholders; the remainder was credited to federal trust funds the government owes itself.

The same audit put total federal debt at $40.2 trillion as of Sept. 30, an increase of about $2.5 trillion in a single year and roughly double the $19.6 trillion owed a decade earlier. GAO concluded that Treasury’s financial schedules were fairly presented and that internal controls were effective.

Payments to bondholders have risen sharply. The audit recorded interest expense on debt held by the public at about $392 billion in fiscal 2021, climbing to about $1.1 trillion in the year just ended. GAO attributed the jump to both the larger stock of debt and higher interest rates.

Net interest ranked behind only Social Security benefits among major federal spending categories last year, according to the Congressional Budget Office’s Monthly Budget Review. CBO’s slightly different measure of net interest on the public debt stood at $1.14 trillion—more than the government spent on Medicare or Medicaid and about $225 billion above what the War Department spent on military activities. CBO reported that net interest rose 11 percent year over year.

GAO linked the growth in debt held by the public to spending that continues to outpace revenue. CBO put the fiscal 2026 deficit at about $2 trillion, up from roughly $1.8 trillion the prior year, and projects average annual deficits above $2.4 trillion over the next decade.

Matthew Dickerson, senior fellow for budget policy at the National Taxpayers Union, said he expects the debt limit to be reached in February 2027. At that point Treasury would have just under $1.5 trillion in cash on hand and would need to take extraordinary measures. He anticipates those resources could be exhausted by the end of November 2027.

“Congress doesn’t need to wait until next year,” Dickerson told The Center Square. “They should increase the debt limit in the lame duck, along with real spending reforms to address the underlying fiscal problem.”

David Ditch of the Cato Institute noted that debt-limit votes have historically been the rare occasions when Congress has been willing to vote for meaningful deficit reduction. “At minimum, they should use the next debt limit vote as an opportunity to cut expected deficits in half by reducing the growth of spending,” he said.

The current $41.1 trillion statutory ceiling was set in July 2025 when the One Big Beautiful Bill Act raised the limit by $5 trillion. Lawmakers have suspended the limit rather than raising it by a fixed amount eight times since the beginning of 2013, according to the Committee for a Responsible Federal Budget. A continuing resolution funds the government only through Dec. 11.