The federal government spent $970.4 billion on interest payments alone in FY2025 — more than it cost to run the Departments of Transportation, Homeland Security, Energy, Labor, Housing and Urban Development, Justice, State, and the Environmental Protection Agency combined. That figure, drawn from the Federal Reserve's FRED database, is not a projection. It is the audited, final result of the fiscal year ending September 30, 2025. And it tells a story that agency budget debates in Congress almost never address.
The U.S. Treasury publishes a little-noticed dataset called the Statement of Net Cost — the government's own financial accounting of what each department actually costs taxpayers after subtracting fees, fines, and other earned revenues. The distinction between gross cost and net cost matters. Some agencies generate substantial revenue; others operate almost entirely on direct appropriations. The net cost figure is the true taxpayer burden — the accountability number.
The Agency Map: Gross Cost vs. Net Cost
The Treasury's FY2025 Statement of Net Cost covers 24 departments and agencies, providing gross cost figures alongside earned revenues. The spread between these two numbers is an accountability metric that rarely surfaces in political discourse. Here is what the data shows for the largest agency spenders in the dataset:
| Agency | Gross Cost | Earned Revenue | Net Cost | Taxpayer Burden |
|---|---|---|---|---|
| Dept. of Transportation | $130.2B | $1.6B | $128.6B | |
| Dept. of Homeland Security | $141.7B | $18.1B | $124.1B | |
| Dept. of Housing & Urban Dev. | $75.2B | $3.8B | $71.4B | |
| Dept. of Energy | $72.6B | $5.8B | $66.8B | |
| Dept. of Labor | $62.5B | $0.0B | $62.5B | |
| Dept. of Justice | $50.2B | $1.7B | $48.5B | |
| Environmental Protection Agency | $37.6B | $0.6B | $37.0B | |
| Dept. of State | $38.1B | $6.4B | $31.9B | |
| U.S. Postal Service | $90.6B | $79.1B | $11.5B |
Several patterns emerge immediately. First, the Department of Transportation nets $128.6 billion despite earning only $1.6 billion in revenue — making it the most purely appropriations-dependent large agency in the dataset. The Department of Labor nets $62.5 billion with zero offsetting revenue. The EPA, at $37.6 billion gross cost and only $0.6 billion in earned revenue, is effectively a full taxpayer burden.
By contrast, the Department of Homeland Security — with a gross cost of $141.7 billion — recovers $18.1 billion through fees and other earned revenues (primarily from TSA, USCIS, and customs operations), netting $124.1 billion. The U.S. Postal Service, though often cited in budget debates, earns $79.1 billion of its $90.6 billion gross cost through mail revenue, leaving a net taxpayer cost of just $11.5 billion.
The gross vs. net distinction reveals which agencies are partially self-funded and which operate entirely on taxpayer appropriations — a distinction that is almost never surfaced in annual budget debates.
— GTP Analysis · U.S. Treasury Statement of Net Cost, FY2025
The Hidden Agency: $970 Billion in Interest
The 24 agencies in the Treasury's Statement of Net Cost combined for approximately $750 billion in net cost — real money, representing real government. Yet this entire sum is now smaller than a single line item that appears in no agency budget debate: interest on the federal debt.
According to FRED Series FYOINT, interest payments on federal debt totaled $970.359 billion in FY2025 — a 10.1% increase from $881.0 billion in FY2024, itself up from $659.2 billion in FY2023. The trajectory is unambiguous: interest has grown from $352 billion in FY2021 to nearly $1 trillion in just four years — a 175% increase. At this rate, annual interest will surpass $1 trillion in FY2026.
Interest payments represent what economists call a "hidden agency" — mandatory, non-discretionary, and entirely immune to congressional budget negotiations. Unlike appropriations for the EPA or the Department of Labor, interest payments cannot be reduced by a House Appropriations subcommittee vote. They flow automatically to Treasury bondholders as existing debt matures and rolls over at current market rates. They are, in a meaningful sense, the most powerful line item in the federal budget precisely because no elected official can cut them.
Interest on the federal debt grew from $352 billion to $970 billion in four years — a 175% increase driven not by new legislation, but by compounding debt at rising market rates.
— FRED Series FYOINT · Federal Reserve Bank of St. Louis
The debt-to-GDP ratio provides the broader context. According to FRED Series GFDEGDQ188S, federal debt as a percentage of GDP reached 122.49% in Q4 2025 — up from 121.44% a year prior and 106.77% before the pandemic. The United States now carries more debt relative to the size of its economy than at any point since World War II. This ratio matters because it determines, over time, the structural sustainability of debt service costs relative to the tax base available to fund them. For additional context on the trajectory, see our Data Dashboard — Debt tab.
The Rate Picture: 3.32% on $39 Trillion
The interest payment arithmetic is straightforward: as of February 28, 2026, the Treasury's average interest rate on all interest-bearing federal debt was 3.320%. Treasury Bills carried 3.720%, Notes averaged 3.190%, and Bonds averaged 3.377%. TIPS (inflation-adjusted securities) had a real yield of 0.990%.
Applied to the $38.99 trillion in total public debt outstanding as of March 26, 2026, the theoretical annual interest cost at 3.32% is approximately $1.295 trillion. The actual FY2025 figure of $970 billion is lower because substantial legacy debt was issued during the low-rate era and has not yet matured. As those bonds roll over at current rates — a process that will continue for years — the effective average rate will rise, pulling actual interest payments closer to the theoretical ceiling.
Agency net cost figures are drawn from the U.S. Treasury's FY2025 Statement of Net Cost (record date: 2025-09-30), sourced via the Treasury Fiscal Data API. The 24-agency dataset represents discretionary and mixed-funding departments; major mandatory-spending programs (Social Security, Medicare) appear separately. Interest payment data (FRED Series FYOINT) represents gross interest paid on federal debt as reported by the U.S. Treasury. Debt-to-GDP figure (FRED Series GFDEGDQ188S) reflects Q4 2025 data from the Federal Reserve Bank of St. Louis. Total public debt is from Treasury's "Debt to the Penny" as of 2026-03-26. Average interest rate data is from Treasury Fiscal Data as of 2026-02-28.
The Accountability Gap
There is a structural disconnect between what citizens observe — agencies being funded or defunded in congressional budget debates — and what actually drives the federal fiscal trajectory. The agencies in the Treasury's Statement of Net Cost represent the visible, debated, politically contested portion of federal spending. They account for roughly $750 billion in net taxpayer cost. Yet that entire sum is now smaller than interest alone.
Mandatory spending programs (Social Security, Medicare, Medicaid) and debt service now account for the overwhelming majority of federal outlays. The discretionary government — the agencies on C-SPAN, the cabinet secretaries at Senate hearings, the departments whose budgets are voted on annually — is increasingly a sideshow relative to the compounding obligations that require no annual vote. The Treasury's own financial statements confirm this compression. The question is whether the political system that appropriates the visible government will ever reckon with the invisible one. The data, for now, says it has not.