$40 trillion U.S. national debt just got uglier as interest payments rise to $1.25 trillion a year
The U.S. national debt has reached $40 trillion, with annual interest payments climbing to $1.25 trillion. Analysts warn that the current debt-to-GDP ratio and rising interest rates create a precarious fiscal environment compared to previous decades.
Why it matters
High interest payments limit government spending on essential services and infrastructure, posing a long-term risk to economic stability.
The federal interest burden has reached a new height, exceeding even the 1991 record, but analysts warn the risks associated with servicing the ever-growing national debt today are much higher than they were 35 years ago, analysts warn.
A recent analysis from investment management firm Doubleline noted that in 2025, the federal net interest payment on the U.S.’s now-$40 trillion national debt reached 18.5% of revenue, surpassing 1991’s record 18.4%. That means the U.S. is collecting nearly 19% of all taxes and revenue just to pay off interest on its ballooning debt, equivalent to $1.25 trillion—more than the entire 2026 defense budget.
Growing interest payments create a cycle: the government must borrow more just to cover the interest, leaving it less flexible to spend on infrastructure, education, and other investments that drive growth.
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