The US budget deficit rose by $217 billion to $1.99 trillion in the 2026 fiscal year, fueled in part by tariff refunds and record spending to service the nation's more-than $40 trillion in debt, marking the largest budget shortfall in five years, Treasury Department figures reported on Friday showed. The results for the year ended September 30, the first full budget year of President Donald Trump's second term, compared to a $1.78 trillion deficit in fiscal 2025. It was the largest shortfall since fiscal 2021's $2.77 trillion budget gap, then fueled by COVID-19 pandemic relief spending, and is the third- largest annual deficit ever.