A staggering stat should shock the American public. With a piling-up national debt, which is common knowledge, the United States’ interest payments are staggeringly high. How high, one might ask?
Well, according to a report published by Fortune, citing a February analysis from the Committee for a Responsible Federal Budget (CRFB), the U.S. is paying nearly $970 billion a year just to service the interest on its $38.8 trillion national debt, a figure that has nearly tripled since 2020.
The annual interest bill has increased due to a rapidly expanding debt load and sharply higher interest rates. To establish a bit of context so that the number sinks in for the American public, the interest payment figure now exceeds what the federal government spends on national defense or Medicaid.
After pandemic-era stimulus spending, federal debt rose by trillions of dollars, while interest rates climbed from near-zero levels to fight inflation, making it much more expensive for the U.S. government to refinance its debt and borrow more.
The scenario is rather concerning, with budget experts warning that it is one of the most consequential fiscal pressures in modern U.S. history. Every dollar spent servicing the interest on the national debt is a dollar that can’t go towards services that benefit the American people—Medicare, Medicaid, infrastructure, defense, etc.
As a share of the economy, interest costs have doubled from 1.6% of GDP in 2021 to a record 3.2% in 2025. That means a larger portion of everything the country produces each year is now being diverted to pay creditors.
Broader Outlook on Every Tax Dollar Spent on Debt Servicing
The Congressional Budget Office’s latest baseline projects that net interest costs will more than double again, from $970 billion in fiscal year 2025 to $2.1 trillion by 2036.
Between now and 2036, public debt is expected to grow by 86%, adding roughly $26 trillion. Meanwhile, the average interest rate on that debt is projected to increase by another half percentage point. Together, they will drive interest costs up by 121%.
By 2036, interest payments are projected to be around one-fourth of all federal revenue—up from roughly one-fifth today and just one-tenth as recently as 2021. In simple terms, for every four dollars the U.S. government collects in taxes, one dollar will go entirely toward paying debts.
Right now, interest spending is on par with Medicare, one of the most politically sensitive programs in the federal budget. By 2029, the CBO projects that net interest costs will surpass Medicare, becoming the second-largest federal expenditure behind only Social Security. Interest payments are projected to be more than Social Security by 2047.
Furthermore, the CRFB estimates that rising interest payments will be around 28% of all nominal spending growth over the next decade and 120% of spending growth as a share of GDP, meaning other programs will have less and less funding relative to the economy.
The national debt currently stands at approximately $38.77 trillion and is growing at roughly $6.43 billion per day. At that pace, it is projected to hit $39 trillion within months.
So far, Washington has yet to produce a solid plan to ease mounting interest pressures and stabilize the debt trajectory. If the problem is not given the attention it deserves, deeper cuts to critical social service programs could be on the horizon.
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