Importers got $6.73 billion back from the federal government in October, almost four times the $1.74 billion refunded in October 2025. That one line, in Table 4 of the Treasury's monthly accounts, is part of why the first month of fiscal 2027 opened with a deficit $120 billion wider than the year before.
The federal government spent $773.0 billion in October 2026 and collected $368.9 billion, leaving a deficit of $404.1 billion, according to the Treasury's Monthly Treasury Statement for October. A year earlier the October deficit was $284.3 billion. Receipts fell 8.8 per cent and outlays rose 12.2 per cent.
Why did receipts fall $35 billion?
Two lines explain almost all of it: customs duties and income taxes paid outside withholding. We set the October 2026 lines beside October 2025 from Table 4.
| Source | October 2025 | October 2026 | Change |
|---|---|---|---|
| Individual income tax, withheld (gross) | 155.9 | 156.4 | +0.5 |
| Individual income tax, other (gross) | 79.5 | 50.5 | -29.0 |
| Individual income tax, net | 217.0 | 186.4 | -30.6 |
| Corporation income tax, net | 15.1 | 18.0 | +3.0 |
| Social insurance and retirement, net | 127.8 | 131.5 | +3.7 |
| Customs duties, gross | 33.1 | 26.0 | -7.1 |
| Customs refunds | 1.7 | 6.7 | +5.0 |
| Customs duties, net | 31.4 | 19.2 | -12.1 |
| Total receipts, net | 404.4 | 368.9 | -35.4 |
Withholding, the tax employers take from paychecks, was flat. The fall is in the "other" line, which holds estimated payments and payments with returns. The likeliest reason is a quirk in the base month. After the Los Angeles fires, the IRS postponed deadlines for taxpayers in Los Angeles County falling between 7 January and 15 October 2025 to 15 October 2025. Payments that would normally have arrived in April and in quarterly instalments therefore landed last October. That is our inference; the Treasury's tables do not give reasons.
Customs is the other story. Gross duties fell $7.1 billion, and refunds rose $5.0 billion. Net customs receipts were 39 per cent lower than a year earlier. The government has been paying back duties collected under the tariffs the courts struck down; at the close of fiscal 2026 the refund total had reached about $147 billion, as we reported in October. A trade court has since certified a class of importers who never sued, which could lengthen the refund queue.
Where did spending rise?
Mostly at the Pentagon, at Medicare and on interest. Outlays rose $84.3 billion. By our grouping of Table 5, five lines account for about $83 billion of increases, partly offset by falls elsewhere.
| Agency or program | October 2025 | October 2026 | Change |
|---|---|---|---|
| Defense, military programs | 95.5 | 124.0 | +28.4 |
| of which military personnel | 48.0 | 67.4 | +19.4 |
| Medicare trust funds (HI and SMI) | 164.9 | 187.5 | +22.7 |
| Commodity Credit Corporation | 1.0 | 12.6 | +11.6 |
| Interest on Treasury debt (gross) | 104.4 | 115.5 | +11.1 |
| Social Security Administration | 144.5 | 153.7 | +9.2 |
| Federal Student Aid | 15.2 | 9.9 | -5.3 |
| Internal Revenue Service | 16.7 | 10.9 | -5.7 |
| Total outlays | 688.7 | 773.0 | +84.3 |
The base matters here too. October 2025 fell inside the 43-day federal shutdown that began on 1 October 2025 and ended when President Donald Trump signed a funding bill on 12 November, so some agencies spent less than normal that month and caught up later. That probably flatters this year's increases for defense operations and some smaller departments. It does less for Medicare and Social Security, which kept paying through the lapse.
The Commodity Credit Corporation, the Agriculture Department's farm-support fund, spent $12.6 billion against $1.0 billion. The table does not say which programs the money went to.
Interest is the steadiest climber. Gross interest on Treasury securities was $115.5 billion, up 10.6 per cent, on the path that took the annual interest bill to $1.36 trillion in fiscal 2026.
How does this fit with other estimates?
It is close. The Congressional Budget Office estimated an October deficit of $409 billion before the Treasury published, according to the Committee for a Responsible Federal Budget, which put the 12-month rolling deficit at $2.1 trillion. The Treasury's figure is about $5 billion smaller.
A single October tells you little about the year. Both distortions, the Los Angeles deadline and the shutdown, sit in last year's base, and both make this October look worse by comparison. The customs refunds are not a distortion. They will continue for as long as refunds keep running ahead of new duties.
What to watch
The November Monthly Treasury Statement, due in the second week of December, will show whether customs refunds keep running at October's pace. The Treasury's daily statements show customs deposits and payments by Customs and Border Protection every business day, so the trend will be visible well before then.
All receipts, refunds, outlays and deficit figures are from the Monthly Treasury Statement for October 2026, Tables 1, 4 and 5, as published through the Treasury's Fiscal Data API and retrieved on 13 November 2026. The Congressional Budget Office's estimate of a $409 billion deficit is as reported by the Committee for a Responsible Federal Budget on 10 November 2026. The Los Angeles County deadline postponement is from IRS release IR-2025-10. The differences, percentages and the grouping of lines are this publication's arithmetic. The explanation of the drop in non-withheld income tax is our inference, not a Treasury statement. The analysis is our own.
Topics nationalfederal budgetdeficitTreasurytariff refundsMedicareinterest costs
