Economic Buzz: US March budget deficit rises slightly as tax breaks lift refunds

The U.S. government reported that the budget deficit for March increased slightly, rising by $4 billion (2%) to $164 billion compared to the same month last year, according to the U.S. Treasury.

The rise was mainly due to higher tax refunds after new individual and corporate tax cuts, along with increased relief payments to farmers.

Spending on the Iran conflict did not increase significantly in the first month, with military and defense expenses going up by just $2 billion (3%) to $65 billion. Officials said most war-related costs, such as replacing weapons, are expected in the coming months.

Customs duty collections fell after the U.S. Supreme Court struck down former President Donald Trump?s broad global tariffs. Revenue from customs duties dropped to $22.2 billion in March, down from $26.6 billion in February and levels above $30 billion late last year, though still higher than $8.2 billion in March 2025.

Overall, government receipts reached $385 billion (up $17 billion or 5% year-on-year), while total spending was $549 billion (up $21 billion or 4%).

After adjusting for timing differences in benefit payments, the deficit would have been $250 billion, an increase of $9 billion (4%) compared to March last year.

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