Tax Season and Rising Debt Costs Push U.S. February DeficitWider

March 12 (Reuters) – The U.S. federal budget deficit grew in February with outlays surging as annual tax-filing season kicked into gear and interest costs on the national debt kept rising, the U.S. Treasury Department said on Tuesday.

The deficit last month was $296 billion, 13% larger than the $262 billion shortfall in February 2023. Outlays for the month grew 8% to $567 billion – a record for the month – while receipts rose 3% to $271 billion. Economists polled by Reuters had expected a deficit of $299 billion in February.

For the first five months of the fiscal year, the deficit rose by $106 billion, or 15%, to $828 billion as interest costs on the national debt rose. The Treasury said both receipts and outlays were records on a year-to-date basis, with receipts up 7% to $1.856 trillion, and outlays up 9% to $2.684 trillion.

Individual tax refunds, which are deducted from receipts, were $58 billion, up 11% from 12 months earlier. The Internal Revenue Service last year had adopted new scanning technology to enable it to process paper returns more quickly. Individual withheld receipts in February, benefiting from strong employment trends, were up $21 billion, or 8%, from a year earlier.

Interest expenses on the $26 trillion national debt continue to grow rapidly, with debt-servicing costs up 67% from February 2023 to $76 billion, a record for the month. On a year-to-date basis, interest on the public debt rose 41% to $433 billion and for the first five months of the fiscal year was exceeded only by Social Security in individual line item expenses.

The weighted-average interest rate on Treasury securities rose to 3.2% in February from 2.52% a year ago and 3.15% in January.