The U.S. Government Accountability Office on Monday released an audit showing the federal debt reached $40.2 trillion at the end of fiscal year 2026.
The rising debt, which has grown by about 105% over the past 10 years, will force the Treasury Department to use extraordinary measures to prevent a government default once the current $41.1 trillion debt limit is reached, unless Congress acts to modify it.
The agency audited the Bureau of the Fiscal Service’s Schedules of Federal Debt for fiscal years 2025 and 2026. The GAO found the schedules were fairly presented and that the bureau maintained effective internal controls over its financial reporting.
Total federal debt increased by about $2.5 trillion in fiscal year 2026. About $2.1 trillion of that increase was debt held by the public. The government ran a budget deficit of about $2.0 trillion in 2026, compared to about $1.8 trillion in 2025.
Total interest costs on the federal debt reached $1.4 trillion. The interest expense on debt held by the public was about $1.1 trillion, nearly tripling from $392 billion in fiscal year 2021. The GAO said the increase in interest expense was due to growing debt and higher interest rates.
Debt subject to the limit surpassed $40 trillion on Oct. 1, 2026. The GAO described the federal government’s fiscal outlook as unsustainable, citing Congressional Budget Office projections of average annual deficits exceeding $2.4 trillion over the next 10 years.
The GAO recommended that Congress and the administration develop a strategy to address the fiscal path, including an approach that links debt limit decisions with spending and revenue choices. The Bureau of the Fiscal Service agreed with the audit’s conclusions.