What the National Debt Is—and Who Holds It

Updated: October 21, 2026

The national debt is the federal government’s total outstanding borrowing. It is held by investors and institutions, including U.S. government accounts and buyers of Treasury securities.

That makes the debt more than a number on a federal balance sheet: it reflects years of borrowing and creates obligations the government must manage. Understanding who holds it helps clarify how federal borrowing works—and why its costs and consequences reach beyond Washington.

• $7.3 trillion, or 20.1% Debt held in federal trust funds and retirement programs
• $4.6 trillion, or 12.6% Debt held by the Federal Reserve System
• nearly $1.9 trillion, or 5.1% Debt held by banks and similar institutions
• almost $1.7 trillion, or 4.6% Debt owned by states and localities

What is the national debt?

The national debt is the federal government’s accumulated borrowing, represented by Treasury securities that remain outstanding. It reflects the balance of expenses financed through borrowing over time, rather than a single year’s budget shortfall. When federal spending exceeds revenue during a fiscal year, the government runs a deficit and must borrow to cover the gap.

Debt and deficit measure different things

The national debt is a stock: it measures the amount owed at a particular point in time. A budget deficit is a flow: it measures how much spending exceeds revenue over a fiscal year. Borrowing to cover deficits adds to the debt, while the debt also includes borrowing from earlier years that has not been repaid.

Treasury securities are the government’s borrowing instruments and form the outstanding balance used to describe the national debt. The distinction matters: a deficit describes one year’s budget outcome, while the debt reflects accumulated borrowing across years. Neither term, on its own, describes the other.

How does an annual deficit become national debt?

A federal deficit becomes part of the national debt when the Treasury borrows to cover the gap between federal spending and revenue. The deficit measures that shortfall over a fiscal year; the debt is the accumulated amount the government still owes.

In fiscal year 2024, the federal government took in $4.9 trillion in taxes and spent $6.8 trillion. Because spending exceeded tax revenue, the government had to finance the difference, primarily by borrowing from the public through Treasury securities.

Annual shortfall versus accumulated debt

Borrowing adds to outstanding debt, but a single year’s deficit is not the total debt. The deficit describes one year’s budget balance, while national debt reflects borrowing that remains unpaid across years. A deficit can therefore increase the debt without being equal to it.

Who holds the national debt?

Federal trust funds and retirement programs, the Federal Reserve System, banks, and state and local governments are among the holders of U.S. national debt. Federal trust funds and retirement programs held $7.3 trillion, or 20.1%, of the debt. The Federal Reserve System held $4.6 trillion, or 12.6%.

Banks and similar institutions held nearly $1.9 trillion, or 5.1%, while states and localities owned almost $1.7 trillion, or 4.6%. These categories describe holders of Treasury securities, not the federal government that issued them.

What does the national-debt total include?

Gross federal debt includes Treasury securities held by the public and securities held in federal trust funds and other government accounts. Treasury securities are the instruments at the center of the debt total, so the gross figure counts claims held both outside and within the federal government.

Two kinds of holders

Debt held by the public is held outside federal government accounts, while debt held by government accounts is recorded within them. Federal trust funds are one example of those accounts; the distinction is about who holds the Treasury securities, not whether they are part of gross federal debt.

Because gross federal debt combines both categories, it is broader than borrowing held outside the federal government alone. A figure limited to public holdings would leave out Treasury securities held by federal trust funds and other government accounts, even though those securities remain part of the gross total.

What does the debt figure not tell you by itself?

The gross national debt cannot tell you by itself whether the federal government ran a deficit in a particular fiscal year; that requires comparing the government’s spending with its revenue for that year. The debt is an accumulated balance, while a deficit is the gap between spending and revenue over a fiscal year.

Debt per citizen is a division of the total debt by the population, not an invoice or legal assignment requiring each person to repay a personal share. A debt-to-GDP ratio answers another question: it compares the debt with the size of the U.S. economy rather than stating the debt in dollars alone. The dollar total, the per-citizen calculation and the ratio are different ways of describing the debt, not interchangeable measures.

Frequently asked questions

Key takeaways

• The national debt is accumulated federal borrowing, not a single-year deficit.
• Treasury securities are the instruments represented in the outstanding debt.
• Federal trust funds and retirement programs and the Federal Reserve System are among the holders.
• A debt-per-citizen calculation is not an individual repayment bill.