By David Lawder
WASHINGTON, May 12 (Reuters) – The U.S. government posted a smaller $215 billion budget surplus in April due to bigger tax refunds this year and rising outlays, including higher interest costs and military spending on the war in Iran, the Treasury Department said on Tuesday.
Budget results in April often show surpluses due to the mid-month filing deadline for tax returns, but the surplus last month was down $43 billion, or 17%, from the $258 billion surplus reported in the year-earlier period.
Individual refunds this year totaled $101 billion, up $14 billion, or 17%, from April 2025 because of new tax breaks on tips, payments from the Social Security retirement program, overtime premium pay and domestic car loan interest. Corporate tax receipts for April also fell $8 billion, or 8%, from a year earlier to $89 billion, while corporate refunds roughly doubled to $6 billion.
The increase in refunds accounted for more than the $13 billion drop last month in receipts, which were down 2% from last year to $837 billion. Outlays in April rose $31 billion, or 5%, to $622 billion.
Net customs receipts totaled $22.1 billion in April, about even with March 2026 and below monthly peaks in the low $30 billion range late last year. But the figure was still up from the $15.6 billion reported in April 2025, the first month of Trump’s “Liberation Day” emergency global tariffs that were later annulled by the U.S. Supreme Court.
Those figures include $2 billion in customs refunds for April, a number that is expected to grow in the budget results for May as court-ordered refund payments from the Customs and Border Protection agency began to flow on Tuesday. Some $166 billion in tariff payments are subject to potential refunds.
The Treasury said the total deficit for the first seven months of fiscal 2026, which ends on September 30, fell $95 billion, or 9%, from the year-earlier period to $954 billion. Year-to-date receipts were up $210 billion, or 7%, to $3.320 trillion, while outlays were up $114 billion, or 3%, to $4.274 trillion.
WAR COSTS, INTEREST ON THE DEBT, SPENDING ON PROGRAMS FOR SENIORS
The report showed that U.S. military spending in April rose $6 billion, or 10% from a year earlier, to $73 billion. A U.S. Treasury official said that the total reflected some outlays related to the Iran war, but that the increase was spread across a number of categories, including personnel and maintenance costs, research and development operations, and procurement.
For the first seven months of fiscal 2026, which ends on September 30, military spending was up $22 billion, or 4%, to $531 billion.
Gross interest on the public debt in April rose $10 billion, or 10%, to $112 billion, a new monthly record amid growing debt levels, the Treasury official said. Year-to-date gross interest costs also hit a record for the first seven months of a fiscal year, at $734 billion, up $50 billion, or 7%, from the year-ago period.
Outlays for Social Security and the Medicare healthcare system for seniors also grew from the year-earlier period. Social Security outlays were up $7 billion, or 5%, to $145 billion in April and rose $50 billion, or 5%, to $995 billion in the fiscal year-to-date period.
Medicare outlays rose $8 billion, or 8%, to $105 billion last month from the year-earlier period, while fiscal year-to-date outlays were up $52 billion, or 8%, to $710 billion.
But outlays for the Medicaid healthcare program for the poor, which has suffered major budget cuts under the current Trump administration, fell $2 billion, or 4%, to $56 billion in April, from the year-earlier period. For the first seven months of fiscal 2026, Medicaid outlays were up $31 billion, or 8%, to $409 billion.
(Reporting by David Lawder; Editing by Paul Simao)
