The U.S. budget deficit ticked slightly lower this year – but it’s still massive.

The Treasury says the government ran a $1.78 trillion shortfall in fiscal 2025, about $41 billion – or 2.2 percent – less than last year.

What helped? Record-breaking tariff revenue.President Trump’s tariffs brought in about 200 billion dollars – that’s a more than 140% jump from 2024 – offsetting some of the pain from sky-high interest payments on America’s $38 trillion national debt.

In fact, interest costs hit $1.2 trillion – another record – now topping defense spending and trailing only Social Security and Medicare.

Still, the deficit-to-GDP ratio is expected to dip to 5.9%, the lowest since 2022. Treasury Secretary Scott Bessent says the U.S. is “on its way” to reducing its debt burden.

The government’s fiscal year ended in September – the U.S. collected $5.2 trillion in revenue and spent just over $7 trillion.

Bottom line – we’re looking at a slightly smaller deficit, record tariff revenue, and record interest costs –  a fiscal picture that’s improving on paper, but still deep in the red.

That’ll do it for your daily briefing. From the New York Stock Exchange, I’m Caroline Woods with TheStreet.