US Budget Deficit Widens to $164 Billion on Tax Refund Surge

The United States recorded a federal budget deficit of $164 billion in March, marking a modest increase of $4 billion, or 2%, compared with the same month last year, according to data released by the Treasury Department.

The rise in the deficit was driven primarily by a sharp increase in tax refunds, following newly introduced tax relief measures for individuals and businesses. Additional pressure came from higher farm aid payments, contributing to a broader uptick in government outlays.

Despite ongoing geopolitical tensions involving Iran, Treasury officials noted that military and defense spending saw only limited growth during the month. Expenditures in this category rose by about $2 billion, or 3%, to reach $65 billion in the early phase of the conflict. Officials added that the bulk of war-related costs, such as replenishing weapons stockpiles, are expected to materialize in the coming months rather than immediately.

On the revenue side, customs duties declined noticeably, reflecting the impact of a Supreme Court decision that struck down a broad set of global tariffs previously imposed under emergency powers during the Trump administration. Tariff revenues fell to $22.2 billion in March, down from $26.6 billion in February, though still significantly higher than the $8.2 billion recorded in March 2025.

Overall, federal revenues rose to $385 billion, up 5% year-on-year, while government spending increased to $549 billion, a 4% annual rise.

Treasury officials indicated that after adjusting for timing shifts in certain benefit payments, the underlying deficit could have reached as high as $250 billion, representing a 4% increase from a year earlier.