Net interest hit $970 billion (13.8% of federal outlays) in FY2025, up from 5.3% just five years earlier

Summary

In fiscal year 2025, the federal government spent about $970 billion on net interest — 13.8% of all federal outlays ($7.01 trillion). That is the third-largest budget item after Social Security and Medicare. The interest share of the budget has more than doubled in five years, moving from 5.3% of outlays in FY2020 to 13.8% in FY2025, and OMB's own budget projects it edging higher still, to roughly 14.7% by FY2031.

How big a share is it now, and the historical trend

Computed directly from OMB Historical Table 3.2 (Outlays by Function), which reports net interest (budget function 900) against total outlays for every fiscal year since 1962:

The share is not a monotonic climb across the full 64-year series: it reached a comparably high level in the early-to-mid 1990s (about 14-15%) when both federal debt and interest rates were elevated, then declined across the low-interest-rate 2000s and 2010s to a series low of about 5.2% in FY2021. The rise from that FY2021 low to the FY2025 level of 13.8% is the steepest four-year climb in this 64-year series, coinciding with the 2022-2023 rate-hiking cycle plus continued growth in the debt stock following large pandemic-era deficits.

How much has it grown, in dollars

Net interest outlays grew from $345.5B (FY2020) to $970.1B (FY2025), a +181% nominal increase over five years. Adjusted for inflation (BLS CPI-U, expressed in FY2025 dollars using this corpus's own CPI deflator series), the FY2020 figure equals about $429.7B in FY2025 dollars, making the real increase +126% over the same five years — a large real increase, not just a price-level artifact. Over ten years (FY2015 real $303.1B to FY2025 $970.1B), real growth is about +220%. Over 25 years (FY2000 real $416.8B to FY2025 $970.1B), real growth is about +133%.

OMB's own FY2026 budget projects net interest continuing to grow in dollar terms every year through 2031 ($1.02T in FY2026 to $1.36T in FY2031), while its share of total outlays is projected to level off in roughly the 13-15% range rather than keep accelerating, because total outlays are also projected to grow over the same period.

Method and sources

Primary figures were queried directly from this corpus's econ.federal_outlays_by_function table, sourced from OMB's own Historical Table 3.2 ("Outlays by Function and Subfunction") — the same table CBO and OMB analysts use for this exact function-share calculation. Net interest is OMB budget function 900; total outlays is the sum across all 20 OMB functions for that fiscal year. FY2026-2031 figures are OMB's own budget-cycle estimates, not measured actuals, and are labeled as such throughout. Inflation adjustment used this corpus's CPI-U (BLS series CUUR0000SA0) annual-average deflator to FY2025 dollars. External reporting (CBO Monthly Budget Review, American Action Forum) independently reports the FY2025 headline figures consistent with the OMB-sourced calculation above: net interest at roughly $970 billion, about 14% of outlays, and the third-largest spending category behind Social Security and Medicare.

Every query behind this report

3 warehouse calls ran in this session, in order. Each is reproducible against the same snapshot.

SELECT year, is_estimate, function_code, function_name, outlays_millions
FROM econ.federal_outlays_by_function
WHERE function_code = '900'
ORDER BY year

SELECT year, SUM(outlays_millions) AS total_outlays
FROM econ.federal_outlays_by_function
GROUP BY year
ORDER BY year

SELECT year, outlays_millions FROM econ.federal_outlays_by_function WHERE function_code='900' AND year IN (2000,2010,2015,2019,2020,2025)