US February budget deficit flat at $308 billion, tariff revenues not yet hit by court ruling

The U.S. budget deficit for February was nearly flat with a year earlier at $308 billion as growth in receipts and outlays was largely even, with receipts from President Donald Trump's tariffs not yet reflecting the U.S. Supreme Court's ruling against many of his duties last month.

The U.S. Treasury Department said February receipts came in at $313 billion, up $17 billion or 6% from a year earlier, while outlays for the month totaled $621 billion, up $17 billion or 3% from February 2025, which was the first full month of Trump's second term. Both receipts and outlays for February were records, a Treasury official said.

Receipt growth was driven in part by a $15 billion increase in individual withheld income taxes in February, partly reflecting the payment of 2025 year-end bonuses, a Treasury official said. This was offset by a $7 billion increase in corporate tax refunds and a $6 billion increase in individual tax refunds driven by last year's Republican-passed tax cut legislation.

The report showed a slight cooling of net customs duties in February to $26.6 billion, compared with $27.7 billion in January and over $30 billion in the final months of last year.

But the Treasury official said the budget data largely does not reflect tariff reductions resulting from the Supreme Court's decision striking down duties under the International Emergency Economic Powers Act as illegal, as tariffs are generally paid a month in arrears. The Customs and Border Protection agency stopped assessing those tariffs on imports starting on February 24.

The official said it was unclear how any IEEPA tariff refunds would show up in the data. CBP is preparing a streamlined refund process ordered by the Court of International Trade, and the Trump administration has imposed a new, temporary 10% duty for 150 days.

The growth in February's outlays was partly driven by interest on the public debt, which grew $8 billion or 9% to $93 billion. Military outlays rose $6 billion or 9% to $67 billion.

For the first five months of the 2026 fiscal year, the Treasury reported a deficit of $1.004 trillion, down $142 billion, or 12% from the same period a year earlier. Fiscal year-to-date receipts rose $205 billion, or 11% to $2.098 trillion, while outlays rose $63 billion, or 2%, to $3.012 trillion.

-David Lawder/Reuters