The U.S. federal budget deficit for August shrank to $167 billion due to smaller outlays including for ongoing refunds on illegally collected tariffs, a rare drop in interest payments and some calendar shifts in benefit payments, while the fiscal-year-to-date budget gap was essentially flat, totaling $1.97 trillion, the U.S. Treasury said on Friday.

The budget gap for the 11 months through August exceeds the full-year fiscal 2025 deficit of $1.775 trillion. For August alone the budget gap was down 52% from a year earlier. Adjusting for calendar shifts that mean some August Medicare and other payments were made in July puts the month’s deficit at $248 billion, up $7 billion from a year earlier.

Unadjusted outlays in August fell by 24%, to $527 billion. Interest payments on the federal debt fell by $14 billion. A Treasury official said the drop was due to changes in inflation accruals, and pointed to the fiscal year-to-date data showing an increase of $143 billion, or 13%, from the same period a year earlier.

Unadjusted August receipts were up $16 billion, or 5%, to $360 billion. This included a $12.84 billion inflow of net customs receipts, the first uptick since April, after tariff refunds totaling $10.54 billion for the month, about a third of the July refunds total of $33.38 billion.

(Reporting by Ann Saphir; Additional reporting by David Lawder; Editing by Andrea Ricci)