U.S. Interest Bill Hits $1.25 Trillion, Consuming 18.5% of Revenue on $40 Trillion Debt
Updated
Updated · Yahoo Finance · Sep 7
U.S. Interest Bill Hits $1.25 Trillion, Consuming 18.5% of Revenue on $40 Trillion Debt
3 articles · Updated · Yahoo Finance · Sep 7
Summary
$1.25 trillion in annual net interest payments absorbed 18.5% of U.S. federal revenue in 2025, edging past the 1991 record of 18.4% despite much lower long-bond yields.
The burden is heavier because debt held by the public now exceeds $32 trillion and 100% of GDP, versus about 44% in 1991, making ordinary-looking rates far more damaging to the budget.
Interest expense as a share of revenue has tripled since 2015, and the Congressional Budget Office projects it could reach 25% by 2036 if growth weakens or Treasury yields rise.
AI-driven borrowing is adding pressure: hyperscalers issued $225 billion of bonds in the first half of 2026, competing for 10- to 30-year capital and potentially forcing the government to offer higher yields.
Since one-fifth of federal revenue now solely pays interest, what critical public investments will be quietly sacrificed to feed this $40 trillion burden?
With tech giants draining capital for AI, could the government's desperate bond buybacks trigger an unprecedented liquidity crisis in the Treasury market?
As volatile private foreign investors replace central banks in holding U.S. debt, what hidden trigger could spark a sudden, catastrophic capital flight?