The debt ceiling, also known as the debt limit, is the maximum amount of money that the U.S. Treasury can borrow. Increasing the debt ceiling allows the Treasury to borrow funds to pay for government obligations that have already been incurred as the result of laws and budgets approved by the President and the Congress.
Legislation signed into law in July 2025 extends the debt ceiling by $5 trillion — from $36.1 to $41.1 trillion.
Why is understanding the debt ceiling important and what are the implications for our economy and our fiscal condition? The infographic below explains. For more details, see our analysis on the debt ceiling.
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Further Reading
Debt vs. Deficits: What’s the Difference?
The words debt and deficit come up frequently in debates about policy decisions. The two concepts are similar, but are often confused.
How Do Quantitative Easing and Tightening Affect the Federal Budget?
The Federal Reserve plays an important role in stabilizing the country’s economy.
How Much Government Spending Goes to Children?
Interest costs on the national debt are expected to rapidly outstrip spending on children in coming years.