How to Calculate a Budget Deficit

A budget deficit equals government outlays minus government revenue in a single year; if revenue is the larger number, the difference is a surplus.

The Budget Deficit formula

Budget deficit = Government outlays − Government revenue (one year)   |   Budget surplus = Revenue − Outlays   |   New debt = Old debt + this year's deficit

Calculator

Enter one year of outlays, revenue and starting debt to get the deficit or surplus and the year-end debt.

Government outlays this year

Purchases, transfer payments, and interest on existing debt.

Government revenue this year

Income, payroll and corporate taxes, tariffs, and fees collected in the year.

Debt at the start of the year

The stock left by every past deficit. The year's deficit is added to it.

Budget deficit

$30B

Outlays exceed revenue by $30B, so the government borrows that much and the debt grows.

Budget position: Deficit
Debt at year end: $630B
Revenue as a percent of outlays: 85.7%

How to calculate Budget Deficit, step by step

1
Total the year's revenue. Add income taxes, payroll taxes, corporate taxes, tariffs, and fees collected during that year.
2
Total the year's outlays. Add government purchases, transfer payments, and interest paid on existing debt.
3
Subtract revenue from outlays. Outlays − revenue gives the deficit, and a negative answer means the budget ran a surplus.
4
Add the result to the debt. The deficit is a one-year flow that adds to the debt, which is the accumulated stock of all past borrowing.

Worked example: Budget Deficit

Suppose a government collects $180B in revenue and has $210B in outlays. The deficit = 210 − 180 = $30B. If its debt started the year at $600B, it ends at 600 + 30 = $630B. The following year revenue is $195B and outlays are $205B, a smaller deficit of 205 − 195 = $10B, yet the debt still climbs to 630 + 10 = $640B. A shrinking deficit still adds to the debt.

Budget Deficit questions

What is the difference between the deficit and the debt?

The deficit is a one-year flow of outlays minus revenue, while the debt is the stock built up from every past deficit. One year of borrowing versus all years of borrowing.

Can the debt grow while the deficit shrinks?

Yes, any deficit at all adds to the debt, so a smaller deficit simply means the debt grows more slowly.

Do transfer payments count as outlays?

Yes, transfer payments are budget outlays even though they are excluded from G in the expenditure approach to GDP.

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Last updated August 1, 2026

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