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
How Much Funding Do State and Local Governments Receive from Federal Government?
Over the last four decades, federal grants to state and local governments have made up about 17 percent of their total revenues.
A Brief History of U.S. Government Shutdowns
Government shutdowns (and the threat of them) are a recent phenomenon and something other developed countries don’t contend with.
Four Reasons Why a Government Shutdown Is Harmful
It may be counterintuitive, but government shutdowns are expensive. They are also bad for the economy.