U.S. federal net interest payments reached $1.25 trillion in 2025, equivalent to 18.5% of federal revenue, according to an analysis by investment management firm DoubleLine.
The ratio surpassed the previous high of 18.4% recorded in 1991. The increase comes as total U.S. national debt has reached approximately $40 trillion and borrowing costs remain elevated compared with much of the previous decade.
The $1.25 trillion in annual net interest payments also exceeds the entire U.S. defence budget for 2026, according to the supplied analysis.
Higher interest expenses can reduce the amount of federal revenue available for other spending and, when financed through additional borrowing, can contribute to further increases in government debt.
Interest Expense as Share of Revenue Has Tripled Since 2015
Federal interest expense as a percentage of revenue has approximately tripled since 2015, according to the Kobeissi Letter, citing Congressional Budget Office projections.
The CBO projects that interest expense could reach 25% of federal revenue by 2036 under its underlying assumptions.
“The US debt crisis is in uncharted territory,” the Kobeissi Letter wrote. “These projections assume no major slowdown, recession, or significant rise in Treasury yields over this period.”
The projections remain estimates and are dependent on future economic conditions, interest rates, government borrowing and fiscal policy.
Current Debt Burden Differs From 1991
DoubleLine highlighted differences between the current fiscal environment and 1991, when federal net interest payments last accounted for a comparable proportion of government revenue.
In 1991, debt held by the public was approximately 44% of U.S. gross domestic product. It has since risen above $32 trillion and now exceeds 100% of GDP, according to the figures cited in the supplied material.
Thirty-year Treasury yields were around 8% in 1991 after having exceeded 10% during previous years. Current long-term yields are lower, but they apply to a substantially larger stock of government debt.
“The federal government has reached a record interest burden with the long bond nowhere near a record yield,” DoubleLine analysts wrote. “The yield itself might look ordinary by historical standards, but the government’s sensitivity to it is not.”
AI Investment Adds to Demand for Long-Term Debt Markets
The increase in federal borrowing is occurring alongside greater issuance of long-term corporate debt by large technology companies financing artificial intelligence infrastructure.
AI-related technology companies issued $225 billion of bonds during the first half of 2026, according to the supplied material, with some companies turning to maturities ranging from 10 to 30 years to finance capital expenditure.
The source material also notes that some AI-related capital investment is tax deductible, which may affect federal tax receipts. The eventual fiscal impact depends on the structure and timing of those investments and applicable tax rules.
Economist Ed Yardeni argued that increased corporate borrowing is competing with U.S. government debt for investor capital.
“Capital flowing into corporate bonds is capital not flowing into Treasuries, and Treasury yields have had to rise to clear the market,” Yardeni wrote in a recent note. “In short, the AI revolution is producing a classic crowding-out effect, causing Treasury yields to rise.”
This represents Yardeni’s assessment of the relationship between corporate issuance and Treasury yields rather than an established sole cause of movements in government borrowing costs.
Treasury Increases Long-Term Bond Buybacks
U.S. Treasury Secretary Scott Bessent increased the size of Treasury buybacks involving 10-to-30-year bonds from $2 billion to at least $4 billion per operation, according to the supplied material.
DoubleLine analysts said the move came as the Treasury manages large federal deficits alongside significant private-sector demand for capital.
“Net interest expense has already reached a record share of revenue, while the Treasury continues to finance large deficits in a market with heavy private demand for capital,” the analysts said. “That makes the level of the long bond more consequential than the historical comparison alone suggests.”
The combination of a larger outstanding debt stock, higher interest expenses and competition for long-term capital has increased the amount of federal revenue required to service U.S. government debt, while the future trajectory remains dependent on interest rates, fiscal policy and economic conditions.