U.S. federal budget deficits will be nearly $1 trillion higher over the next decade than previously forecast, largely due to recently enacted tax and spending legislation and ongoing tariffs, according to new projections released by the Committee for a Responsible Federal Budget (CRFB).
The non-partisan budget watchdog now estimates a cumulative federal deficit of $22.7 trillion from fiscal years 2026 to 2035, up from the $21.8 trillion projected in January by the Congressional Budget Office (CBO).
The earlier CBO figures were based on laws and policies in effect before president Donald Trump returned to office in January.
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The updated CRFB projections factor in the fiscal impact of the One Big Beautiful Bill Act —a sweeping tax and spending package — as well as tariffs currently implemented by the Trump administration.
However, like the CBO, CRFB does not include potential economic growth effects from these measures, a practice that has faced criticism from Trump officials.
The CRFB forecasts a federal deficit of $1.7 trillion in fiscal year 2025, equivalent to 5.6 percent of GDP, a slight decrease from $1.83 trillion in 2024 and the CBO’s prior estimate of $1.87 trillion for 2025.
Despite the short-term dip, deficits are projected to steadily increase, reaching $2.6 trillion or 5.9 percent of GDP by 2035.
Legislation and tariffs drive budget changes
CRFB estimates the One Big Beautiful Bill Act will increase deficits by $4.6 trillion through 2035, including interest payments, surpassing the CBO’s earlier $4.1 trillion estimate through 2034.
This rise is expected to be partially offset by $3.4 trillion in additional revenue from import duties generated by Trump’s tariffs over the next decade.
Additional savings are projected from new restrictions on eligibility for health insurance subsidies, estimated to reduce deficits by $100 billion, and rescinded funding for foreign aid, public broadcasting, and other programs, which could save another $100 billion over 10 years if maintained.
Meanwhile, net interest payments on the national debt are projected to total $14 trillion from 2026 to 2035, climbing from nearly $1 trillion or 3.2 percent of GDP in 2025 to $1.8 trillion or 4.1 percent of GDP in 2035.
Mid-year update delayed
In a surprising move, the CBO announced that it will not release its customary mid-year budget update in 2025. Instead, the agency said it will issue its next 10-year budget and economic outlook in early 2026, without offering a reason for the delay.
Risks ahead: Court ruling could undermine tariff revenues
CRFB also released an alternative scenario in which deficits rise nearly $7 trillion above the CBO’s baseline, should certain conditions unfold. A key risk: A recent ruling by the U.S. Court of International Trade that could invalidate many of Trump’s new tariffs. If upheld, it would slash expected tariff revenues by $2.4 trillion over the next decade.
The alternative scenario also assumes that several temporary tax provisions in the One Big Beautiful Bill Act — including tax breaks on overtime, tips, Social Security income, car loan interest, expanded state and local tax deductions, and full expensing for factory investments—will be extended. This would add another $1.7 trillion to the deficit through 2035.
The CRFB emphasized that while the near-term deficit outlook has slightly improved, the long-term fiscal trajectory remains deeply concerning without significant reforms to revenues, spending, or both.
