WASHINGTON, Oct 16 (Reuters) - The U.S. budget deficit

shrank by $41 billion to $1.775 trillion in the 2025 fiscal

year, despite a $118 billion increase in revenues from President

Donald Trump's tariffs, the Treasury Department reported on

Thursday.

The results for the year ended September 30, which include

nearly nine months of Trump's second term in the White House,

compared to a $1.817 trillion deficit in fiscal 2024. It was the

first time the annual deficit had fallen since 2022, when the

unwinding of COVID-19 relief programs brought spending down.

The smaller deficit was aided by a record $195 billion in

net customs receipts for the fiscal year, an increase of $118

billion from the prior year as new Trump tariffs rolled in.

Total receipts for fiscal 2025 were a record $5.235

trillion, up $317 billion, or 6%, from the $4.918 trillion in

fiscal 2024. Fiscal 2025 outlays also were a record at $7.01

trillion, up $275 billion, or 4%, from the $6.735 trillion in

the prior fiscal year.

A U.S. Treasury official said the department calculated an

estimated deficit-to-GDP ratio of 5.9% for fiscal 2025, but

declined to say what GDP estimate was used. This figure compares

to an actual 6.3% deficit-to-GDP ratio for fiscal 2024.

For the 2025 fiscal year's final month of September, the

Treasury reported a record surplus of $198 billion, up $118

billion, or 147%, from the same month in the prior year.