U.S. Debt Tops $40 Trillion as Interest Burden Reaches Record Share of Revenue

The US national debt has surpassed $40 trillion, while the federal government's net interest burden has reached a record share of revenue, highlighting the growing cost of servicing the country's debt.

US Treasury Secretary Scott Bessent faces rising borrowing costs as the federal debt surpasses $40 trillion and interest payments consume an increasing share of government revenue.

A recent analysis by investment manager DoubleLine found that federal net interest expense amounted to 18.5 percent of federal revenue in 2025, slightly above the previous record of 18.4 percent set in 1991.

The analysis cited by Fortune put 2025 net interest payments at about $1.25 trillion.

That figure was larger than total federal defense spending for the year, according to the report.

The United States' total national debt crossed the $40 trillion mark in August, according to Treasury data cited by Reuters. The debt includes both debt held by the public and intragovernmental holdings.

The scale of today's interest burden is particularly notable because Treasury yields are much lower than they were during the period surrounding the previous 1991 record.

DoubleLine noted that the 30-year Treasury yield was around 8 percent in 1991, compared with slightly above 5 percent today.

The difference reflects the much larger stock of federal debt.

Treasury Secretary Scott Bessent has responded to rising long-term borrowing costs by expanding the Treasury's buyback operations for longer-dated government debt.

In August, Treasury announced that the size of some buyback operations involving 10- to 30-year securities would increase from $2 billion to at least $4 billion per operation.

The buybacks are intended to improve liquidity and help the functioning of the Treasury market.

They do not, however, directly address the federal government's underlying budget deficit or the long-term growth of the debt.

The Congressional Budget Office projects that net interest outlays will rise from about 3.3 percent of GDP in 2026 to 4.6 percent in 2036, reaching roughly $2.1 trillion in nominal terms by 2036.

The CBO also projects that debt held by the public will rise from 101 percent of GDP in 2026 to 120 percent in 2036 under the laws and policies incorporated into its baseline.

The growing interest burden could limit the government's fiscal flexibility because more federal revenue would be required to service existing debt rather than finance other priorities.