FILE PHOTO: A picture illustration shows U.S. 100-dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao/File Photo
WASHINGTON (Reuters) – The U.S. government posted a $262 billion budget deficit in February, up 21% from a year earlier, as outlays grew and revenues fell, due largely to higher tax refunds issued as the Internal Revenue Service worked through a substantial backlog of unprocessed returns.
The Treasury Department said on Friday the deficit last month compared to a $217 billion budget gap in February 2022.
Receipts for the month fell $28 billion, or 10%, to $262 billion, while outlays grew $18 billion, or 4%, to $525 billion.
The Treasury said individual withheld tax receipts in February climbed $10 billion, or 4%, compared to a year ago, but individual tax refunds, which reduce revenues, grew $31 billion, or 153%, to a total of $52 billion.
A Treasury official said most of the tax refunds issued during February were from backlogged returns that had piled up during the COVID-19 pandemic but are now being processed by the IRS.
For the first five months of the 2023 fiscal year that started Oct. 1, the Treasury said the cumulative deficit came to $723 billion, up $247 billion, or 52%, from the comparable period of fiscal 2022, when the deficit was $476 billion.
Year-to-date receipts fell 4% to $1.735 trillion, while outlays grew 8% to $2.458 trillion.
The biggest drivers of deficits this year, according to Treasury data, have been interest on the public debt, which is up $69 billion, or 29%; higher individual tax refunds, also up $69 billion, or 136%; lower federal reserve earnings, down $47 billion, or 99%; and higher Social Security costs, up $45 billion, or 9%.