Federal debt interest hits $857B in 9 months — that's $737/month for every U.S. household
Federal debt interest hits $857B in 9 months — that's $737/month for every U.S. household.
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On July 9, the Congressional Budget Office (CBO) (1) published a budget review that many American taxpayers might find deeply upsetting. Not only are the government's finances in bad shape, they're actually getting worse.
The federal government's deficit — the amount of money it spends in excess of tax revenue — totaled $1.4 trillion in the first nine months of fiscal year 2026. That's $35 billion higher than the same period last year, and that level of overspending has expanded the national debt to a whopping $39.64 trillion, as of July 2026, according to the U.S. Treasury Department (2).
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One of the biggest costs in the budget is servicing the debt itself. From October 2025 to June 2026, the government spent $857 billion in net interest costs, according to the CBO's budget review, which makes it a larger expense than the military or Medicare. Putting it another way, that's roughly $95.2 billion per month, or $737 monthly per household when dividing it between the roughly 129 million households in the U.S (3).
To be clear, this isn't an out-of-pocket expense for households — you probably won't be getting a government interest payment bill in the mail. But that doesn't mean the national debt burden won't have an impact on your personal finances in an indirect way.
Like any other borrower, the U.S. government has two ways to tackle its immense debt burden: increase income or reduce spending. At the moment, President Donald Trump seems to be pulling both levers in opposite directions.
The administration's One Big Beautiful Bill Act (OBBBA), for instance, is expected to reduce taxes (which are government revenue) by $5 trillion between 2025 and 2034, according to the Tax Foundation (4). At the same time, the Department of War (5) has requested $1.5 trillion in funding for the 2027 fiscal year, a 42% increase in what is already one of the biggest line items in the federal budget.
Meanwhile, cost-cutting efforts were outsourced to billionaire Elon Musk's Department of Government Efficiency (DOGE), which failed to move the needle in a meaningful way before it shut down, per an analysis by the Center for Economic and Policy Research (6).
In other words, government revenue is expected to go down, while debt is expected to keep expanding. And that means ordinary Americans could expect higher borrowing costs, inflation and stagnant wages, according to the U.S. Government Accountability Office (GAO) (7).
The U.S. already has a sovereign credit rating (AA+) from S&P Global Ratings that is lower than many of its peers, such as Canada, Australia and Germany (all AAA), as reported by the Peter G. Peterson Foundation (8) — and a growing debt pile could lead to even more potential downgrades in the future.
Meanwhile, every household can expect a $300 to $1,250 reduction in purchasing power over five years for every primary deficit increase of 1% of GDP, according to calculations by Yale University's The Budget Lab (9).
To make matters worse, any future lawmakers or presidents who decide to tackle the issue would have to impose deeply unpopular reforms such as raising taxes, cutting Social Security or diminishing services.
However, there are still ways to minimize the impact on your personal finances before it's too late.
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If you're worried about inflation, stagnant wages and future tax hikes, you could focus on investing in hard assets with tax benefits and steady cash flows to mitigate the impact.
