Federal Deficit and Debt: July 2024

Every month the U.S. Treasury releases data on the federal budget, including the current deficit or surplus. The following contains budget data for July 2024, the tenth month of fiscal year (FY) 2024.

• Federal Budget Deficit for July 2024: $244 billion
• Federal Budget Deficit for July 2023: $221 billion

The federal government ran a deficit of $244 billion in July 2024, $23 billion more than the deficit of $221 billion that was recorded in July 2023. It is important to note that certain payments were shifted into June 2023 because July 1, 2023, fell on a weekend, artificially reducing spending reported for last July. Adjusting for the effects of that timing shift, the July 2024 deficit was $63 billion less than the same month last year.

Spending in July 2024 was $574 billion, $77 billion more than in July last year, although that total increase is attributable to the timing shift. Adjusting for that shift, outlays were down $9 billion compared to July 2023. The reduction in adjusted outlays was driven by a $73 billion decrease in spending by the Department of Education stemming from loan modifications recorded in July 2023 but not this year. Partially offsetting that decline in spending was an increase in outlays for defense ($15 billion more than July 2023) and net interest spending ($14 billion). Revenues in July 2024 were $54 billion above collections from a year ago, mainly due to increased collections of individual income and payroll taxes ($31 billion) and excise taxes ($16 billion).

Cumulative Federal Deficit

• Cumulative FY24 Deficit: $1.5 trillion
• Cumulative FY23 Deficit (through July 2023): $1.6 trillion

This year’s cumulative deficit is $97 billion below last year’s level. However, because October 1 fell on a weekend in both calendar years 2022 and 2023, certain federal payments were shifted into the previous fiscal year in both FY23 and FY24. Without that effect, the deficit for FY24 through the end of July would be $88 billion below last year’s corresponding total.

For the first 10 months of FY24, total outlays were $5.6 trillion, $299 billion higher than the same period in the previous year. Adjusting for timing shifts, spending was $308 billion above the same period last year. Two areas of the budget have experienced rapid increases so far this year. Net interest has grown by $202 billion (38 percent) relative to the first 10 months of last fiscal year, primarily due to higher interest rates; spending for Social Security benefits has risen by $90 billion (8 percent) because of cost-of-living adjustments and an increased number of beneficiaries. In addition, spending on Medicare and defense has increased significantly this fiscal year. Partially offsetting those increases was a $51 billion decrease in outlays from tax credits related to the government's response to the COVID-19 pandemic. Other categories of outlays that decreased include spending by the Department of Education ($43 billion, mostly related to the loan modifications made last year) and activities of the Pension Benefit Guaranty Corporation, because certain one-time payments were made to pension plans in FY23 but not in FY24 ($35 billion).

Total revenues increased by $396 billion in the first 10 months of FY24 compared to the previous year. The main drivers were a significant increase in collections of individual income ($214 billion more than the same period in FY23), corporate income ($92 billion), and payroll taxes ($74 billion). Such revenues have been higher in FY24 than through the same period in FY23, in part because the IRS allowed certain locations that suffered natural disasters to defer payments until this fiscal year. In addition, higher wages and salaries boosted individual and payroll tax collections and the moratorium on the Employee Retention Tax Credit has significantly reduced individual income tax refunds.

National Debt

• Debt Held by the Public at the end of July 2024: $27.8 trillion
• Debt Held by the Public at the end of July 2023: $25.6 trillion

Despite a healthy economy, spending has been rapidly outpacing revenue collections. The unsustainable upward trajectory of deficits and debt argues for bipartisan solutions to improve the country’s fiscal outlook. The Peterson Foundation’s recent Solutions Initiative provides a compendium of approaches to improve that outlook.