# US debt interest payments top $1 trillion for first time in fiscal 2026

> Rising Treasury yields pushed interest costs above 3% of GDP, outpacing growth in federal spending, revenue, and the broader economy.

- Source: Pacific Post
- Canonical URL: https://pacificpost.co.uk/article/us-debt-interest-payments-top-1-trillion
- Author: Pacific Post Staff
- Section: Economy
- Published: 2026-10-17T15:30:00.000Z
- Updated: 2026-10-17T15:30:00.000Z
- Tags: debt, Treasury, federal budget, economy

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The US federal government's net interest payments on its debt surpassed $1 trillion in fiscal 2026, a milestone that underscores how quickly borrowing costs have climbed even as the overall economy continues to grow.

Net interest costs reached roughly $1.05 trillion for the year, equivalent to close to $2.9 billion a day, while gross interest costs before offsetting income came to about $1.36 trillion. The average interest rate the government now pays on its debt has more than doubled since 2021, rising to roughly 3.53 percent.

Interest costs grew faster than almost every other major budget category this year, expanding at a pace that outstripped overall federal spending growth, revenue growth, and the economy's real output. As a share of GDP, interest payments climbed to about 3.2 percent, surpassing a level last reached in the early 1990s. Interest has now grown into the third largest line item in the federal budget, trailing only Social Security and Medicare and ahead of both defense and Medicaid spending.

Much of the pressure traces back to Treasury yields, which have run well above the levels budget forecasters had assumed earlier in the year. With roughly a third of the government's publicly held debt set to mature and need refinancing within the next twelve months, even modest moves in yields can translate into substantial swings in future interest costs. Analysts have warned that if rates stay elevated relative to earlier projections, annual interest costs could climb dramatically higher by the end of the decade.

The figures add to a broader debate in Washington over the long term sustainability of federal borrowing, as lawmakers weigh spending priorities against a debt service bill that is consuming an increasing share of the government's resources.

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Originally published by Pacific Post. Free to cite with attribution and a link to https://pacificpost.co.uk/article/us-debt-interest-payments-top-1-trillion.