How to Read the Financial Report of the U.S. Government — Deficit, Net Operating Cost and Net Position

As of 6 November 2026, 01:49 KST (retrieved by this page at that time); latest edition on the Bureau of the Fiscal Service's pages: the Fiscal Year (FY) 2025 Financial Report of the United States Government, prepared by the Department of the Treasury with the Office of Management and Budget (OMB), covering the fiscal years ended September 30, 2025, and 2024. Last Updated dates: [1] and [2] show May 7, 2026; [4] shows April 14, 2026. The cited pages do not give a publication date for the report itself; GAO's audit report [5] is dated March 11, 2026. Primary source: https://fiscal.treasury.gov/accounting/us-financial-report/nation-by-numbers^[1][2][4][5]

Comparison basis: dollar figures are from Treasury's Nation by the Numbers table in billions of dollars, rounded to one decimal; the text rounds the same totals to trillions (for example $1.8 trillion for the budget deficit). FY 2024 values are marked in the table as restated for a correction of error. The asset, liability and net position changes are this page's calculations from the table; the other changes are as stated by Treasury. The table prints costs, deficits and liabilities in parentheses; this page shows the deficit and costs as positive amounts and the net position with a minus sign.^[1][2][3]

In three lines

1. The Financial Report is the federal government's annual accrual-based financial statement, set beside the cash-based budget deficit.
2. For FY 2025 the budget deficit was $1,775.4 billion and net operating cost $2,093.2 billion; Treasury puts the $317.8 billion difference mainly on accrued benefit costs.
3. Total liabilities of $47.8 trillion exceed total assets of $6.1 trillion, a net position of minus $41.7 trillion.^[1][2][3]

Two ways of counting. For the Budget, "Receipts are cash received by the U.S. government and spending is measured as outlays, or payments made by the federal government to the public or entities outside the government." The Financial Report works on an accrual basis: "It compares the government's revenues (amounts earned, but not necessarily collected), with costs (amounts incurred, but not necessarily paid) to derive net operating cost." Net operating cost is therefore not the budget deficit restated; it is a different measure of the same fiscal year.^[3]

How it is built. "The Financial Report is compiled primarily from individual federal agencies' audited financial statements and related information included in the agencies' financial reports." The Executive Summary adds that entities administering federal employee and veteran benefits programs use actuarial projections to estimate their long-term benefits liabilities.^[3][4]

What net position leaves out. "The government's net position is calculated in accordance with federal accounting standards." "Per these standards, net position does not include the financial value of the government's sovereign power to tax, regulate commerce, or set monetary policy, or the value of nonoperational resources, such as national and natural resources, for which the government is a steward." A negative net position of $41.7 trillion is an accounting balance under those standards, not a measure of everything the government owns or can raise.^[1]

Audit status. "The Government Accountability Office (GAO) is required to audit these statements." The Executive Summary states: "GAO was unable to express an opinion (disclaimed) on these consolidated financial statements for the reasons discussed in the audit report." GAO's independent auditor's report, dated March 11, 2026, gives the basis for the accrual-based statements: "The federal government is not able to demonstrate the reliability of significant portions of the accompanying accrual-based consolidated financial statements as of and for the fiscal years ended September 30, 2025, and 2024, principally because of limitations related to certain material weaknesses in internal control over financial reporting and other limitations affecting the reliability of these financial statements and the scope of our work." "Treasury was unable to provide us with adequate representations regarding the accrual-based consolidated financial statements for fiscal years 2025 and 2024, primarily because 11 of the 38 significant federal entities received disclaimers of opinion or qualified opinions on their fiscal year 2025 financial statements or their fiscal year 2025 financial information was unaudited and they were not able to provide sufficient representations." "As a result of these limitations, readers are cautioned that amounts reported in the accrual-based consolidated financial statements and related notes may not be reliable." For the sustainability statements (long-term fiscal projections and social insurance): "Significant uncertainties (discussed in Note 25, Social Insurance, to the consolidated financial statements), which primarily relate to the achievement of projected reductions in Medicare cost growth, affect the sustainability financial statements."^[3][4][5]

Scope. The reporting entity is the federal government, not state and local governments; the summary also lists the latter among possible holders of federal debt.^[3]

Budget deficit vs net operating cost. "The budget deficit decreased by $41.4 billion (2.3 percent) to $1.8 trillion and net operating cost decreased by $292.0 billion (12.2 percent) to $2.1 trillion." "The primary contributor to the difference between the deficit and net operating cost is an increase in the liability for federal employee and veteran benefits payable that affects the government's current-year costs but does not affect the current-year budget deficit." The Executive Summary gives the gap as $317.8 billion and lists other sources of difference, including property, plant and equipment, advances and prepayments, earnings on investments in Government-Sponsored Enterprises, and the timing of credit program costs.^[2][3]

Debt held by the public vs federal debt and interest payable. "During FY 2025, federal debt held by the public increased $2.0 trillion (7.0 percent) to $30.3 trillion." The balance sheet line Federal Debt and Interest Payable ($30,334.1 billion) adds interest payable. Intra-governmental debt (about $7.3 trillion, for example trust fund holdings) is not in total liabilities, though it counts toward debt subject to the limit, which Treasury puts at $37.5 trillion at the end of FY 2025.^[1][3]

Revenue growth vs the customs line. "Notably, the increase in revenues includes the effect of a $133.9 billion (275.3 percent) increase in custom duties to $210.3 billion pursuant to multiple tariffs implemented during FY 2025." Treasury prints 275.3%; the stated amounts imply an increase of about 175.3% (this page's calculation: $210.3 billion minus the $133.9 billion increase leaves $76.4 billion for FY 2024, and 133.9 divided by 76.4 is 175.3%). The words custom duties are as printed in the Executive Summary, which elsewhere writes customs duties. The attribution to tariffs is Treasury's; this page does not establish how much of the revenue change each tariff explains. GAO's audit report adds that 2026 court rulings on tariffs collected under the International Emergency Economic Powers Act leave the effect on the statements uncertain: "Management has indicated that the potential effect of these cases on the consolidated financial statements cannot be reasonably estimated."^[3][5]

Measured ratio vs projected ratio. "The debt held by the public as a percent of gross domestic product (GDP), or debt-to-GDP ratio, was 99 percent at the end of FY 2025." "Under current policy and based on this report's assumptions, it is projected to reach 576 percent by 2100." "The projections are therefore neither forecasts nor predictions." "The long-term projections are highly uncertain." The 99 percent is an end-of-year ratio; the 576 percent is a current-policy projection. The cited pages do not state which GDP series the ratios use.^[2][3]

Fiscal gap: text vs table. "That estimated fiscal gap for 2025 is 4.7 percent of GDP (0.3 percentage points higher than 2024)." The Nation by the Numbers table shows 4.7% and 4.3%, which differ by 0.4 when subtracted. The Statements of Long-Term Fiscal Projections print the same 4.7 and 4.3 with a change column of 0.3, and note: "Totals may not equal the sum of components due to rounding." They also state: "The projections reflect policies currently in place and are neither forecasts nor predictions." Both table values are rounded to one decimal, so the difference is consistent with rounding, but the displayed values cannot confirm the cause.^[1][3][6]

Period. "The Financial Report addresses the government's financial activity and results as of and for the fiscal years ended September 30, 2025, and 2024." Events after September 30, 2025 are in Note 29 (Subsequent Events), which this page does not cover.^[3]

Restated prior year. FY 2024 figures in the table are restated. The Executive Summary says net costs, assets, liabilities and the budget deficit were restated to correct errors, connected with Department of Defense and Security Assistance Accounts reporting work. Compare FY 2025 with the restated FY 2024 column, not with last year's report.^[1][3]

Figures from other agencies. The Executive Summary quotes the Office of Personnel Management's (OPM) website for workforce numbers: about 68,000 hires and about 317,000 departures, as stated by OPM on November 21, 2025 for that year (OPM writes this year; the Executive Summary places it in calendar year 2025). They are OPM's figures, given before the year ended, and are not part of the fiscal-year statements.^[3][7]

Newer edition. At retrieval, the Bureau of the Fiscal Service's pages listed the FY 2025 report as the current report. The cited pages do not state a release date for the FY 2026 report.^[4]