US January deficit falls sharply as receipts grow, tax refunds fall By Reuters

© Reuters. A bronze seal for the Department of the Treasury is shown at the U.S. Treasury building in Washington, U.S., January 20, 2023.? REUTERS/Kevin Lamarque/File Photo

By David Lawder

WASHINGTON (Reuters) – The U.S. federal budget deficit fell sharply in January to $22 billion as receipts hit a record for that month, partly because tax refunds fell after the Internal Revenue Service cleared a backlog of pandemic-delayed tax returns, the U.S. Treasury said on Monday.

The deficit last month was $17 billion, or 43%, less than the $39 billion deficit in January 2023. Outlays for the month grew 3% to $499 billion, while receipts jumped 7% to $477 billion.

For the first four months of the fiscal year, the deficit rose $72 billion, or 16%, to $532 billion as interest costs on the national debt rose. The Treasury said both receipts and outlays were records for the period, with receipts up $112 billion, or 8%, to $1.585 trillion, and outlays up $184 billion, or 10%, to $2.117 trillion.

This January’s comparison with a year ago was also helped by the $36 billion bailout of a Teamsters union pension fund in January 2023, as no similar large one-time outlays were recorded this year.

Individual tax refunds, which are deducted from receipts, were $15 billion lower in January than during January 2023. The IRS last year had adopted new scanning technology to enable it to process paper returns more quickly. Individual withheld receipts in January, benefiting from strong employment trends, were up $20 billion, or 7%, from a year earlier.

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