WASHINGTON, Jan 17 (Reuters) - The Congressional Budget

Office on Friday forecast a $1.865 trillion U.S. budget deficit

for fiscal 2025, largely flat with last year and indicating no

major deterioration in government finances before

President-elect Donald Trump takes office on Monday.

The CBO "baseline" estimates are based on current laws and

assume that Trump's 2017 individual tax cuts expire as scheduled

at the end of this year, causing rates to snap back to higher

levels.

Efforts by Trump and Republicans in Congress to extend

current individual and small business tax rates could add over

$4 trillion to deficits over 10 years if not offset with savings

elsewhere. Other tax breaks promised by Trump, such as exempting

Social Security, tip and overtime income from taxation, could

add more debt.

The CBO data shows that deficits decline slightly to $1.687

trillion, or 5.2% of GDP in fiscal 2027 before gradually rising

to $2.637 trillion, or 6.5% of GDP in 2033. The 2026-2035

cumulative deficit is estimated at $21.758 trillion, or 5.8% of

GDP.

The CBO's fiscal 2025 deficit, which equates to 6.2% of GDP,

is about $73 billion lower than the non-partisan budget referee

agency's previous forecast for that year in June 2024.

"The largest contributor to the cumulative decrease was

growth in projected collections of individual income taxes,

driven by greater projections of taxable income in CBO's

economic forecast," CBO said in the report.

The CBO forecasts a slightly slower U.S. economic growth

rate, at 1.9% for 2025, compared to 2.0% in the June forecasts,

with growth averaging 1.9% over the 2024-2034 window.