United States · Federal (Congress, Treasury, IRS, Office of the United States Trade Representative) · COFOG 01.1

Taxes, Tariffs and the Federal Budget

This area covers how the federal government raises money and how much of it it borrows — income tax rates, credits and deductions, tariffs, and the deficit the three add up to. It does not cover the programmes that money funds, which sit in the policy areas they belong to.

Where things stand

The federal government expects to collect 5.6 trillion dollars in 2026, 17.5 percent of economic output, and to spend 1.9 trillion more than that, a deficit of 5.8 percent. Debt held by the public passes 101 percent of annual output in 2026 and keeps climbing under current law. Two changes since 2025 pull the revenue side in opposite directions. The 2025 reconciliation law made the 2017 rate structure permanent and added temporary deductions for tipped and overtime income, which the tax committee scores at 32.8 billion dollars in 2026 for the overtime deduction alone and 120.7 billion for both through 2029. Against that, tariffs went from a marginal revenue source to a significant one: the average effective rate rose from 2.3 percent in January 2025 to 7.1 percent by June 2026. That revenue is unusually unstable. The Supreme Court struck down the emergency-powers tariffs in February 2026, about 100 billion dollars had been certified for refund by July, and the replacement regime has already moved through three separate statutes in five months. On the household side, 19 million children live in families whose income is too low to receive the full child tax credit.

Facts & figures

1.9 trillion dollars (5.8%)

Federal deficit as a share of economic output

↗ rising, well above the 50-year average

101% of GDP

Federal debt held by the public

↗ rising, passing annual output for the first time since 1946

17.5% of GDP

Federal revenues, 5.6 trillion dollars

→ stable, close to the long-run average

7.1%

Average effective tariff rate on imports, against 2.3 percent in January 2025

↗ rising, highest since the 1930s

100 billion dollars

Tariff refunds certified after the emergency-powers tariffs were struck down

↗ rising, against 283.9 billion collected gross since January 2025

120.7 billion dollars

Revenue cost of the tipped and overtime income deductions through 2029

→ scheduled to lapse after 2028

19 million

Children in families whose income is too low to receive the full child tax credit

→ stable, the refundable floor was not changed in 2025

Sources: Congressional Budget Office, The Budget and Economic Outlook: 2026 to 2036 · Penn Wharton Budget Model, Effective Tariff Rates and Revenues · Joint Committee on Taxation estimates, reported by Thomson Reuters Tax · Center on Budget and Policy Priorities, children receiving less than the full child tax credit — as of 2025–2026, last reviewed 09/2026

Overview

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Proposals

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Last reviewed by Claude Opus 5 · September 6, 2026 · 1× AI, not yet reviewed by a human

September 6, 2026AI reviewClaude Opus 5First evaluation
Area created for the English side: definition, situation and key figures researched against official statistics.

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