* April budget surplus falls $43 billion, or 17%, from a

year earlier

* Treasury gross interest costs hit new monthly record

* April results show $6 billion rise in military

spending, partly due to Iran war, official says

By David Lawder

WASHINGTON, May 12 (Reuters) - The U.S. government

posted a smaller $215 billion budget surplus in April due to

bigger tax refunds this year and rising outlays, including

higher interest costs and military spending on the war in Iran,

the Treasury Department said on Tuesday.

Budget results in April often show surpluses due to the

mid-month filing deadline for tax returns, but the surplus last

month was down $43 billion, or 17%, from the $258 billion

surplus reported in the year-earlier period.

Individual refunds this year totaled $101 billion, up $14

billion, or 17%, from April 2025 because of new tax breaks on

tips, payments from the Social Security retirement program,

overtime premium pay and domestic car loan interest. Corporate

tax receipts for April also fell $8 billion, or 8%, from a year

earlier to $89 billion, while corporate refunds roughly doubled

to $6 billion.

The increase in refunds accounted for more than the $13

billion drop last month in receipts, which were down 2% from

last year to $837 billion. Outlays in April rose $31 billion, or

5%, to $622 billion.

Net customs receipts totaled $22.1 billion in April, about

even with March 2026 and below monthly peaks in the low $30

billion range late last year. But the figure was still up from

the $15.6 billion reported in April 2025, the first month of

Trump's "Liberation Day" emergency global tariffs that were

later annulled by the U.S. Supreme Court.

Those figures include $2 billion in customs refunds for April, a

number that is expected to grow in the budget results for May as

court-ordered refund payments from the Customs and Border

Protection agency began to flow on Tuesday. Some $166 billion in

tariff payments are subject to potential refunds.

The Treasury said the total deficit for the first seven months

of fiscal 2026, which ends on September 30, fell $95 billion, or

9%, from the year-earlier period to $954 billion. Year-to-date

receipts were up $210 billion, or 7%, to $3.320 trillion, while

outlays were up $114 billion, or 3%, to $4.274 trillion.

WAR COSTS, INTEREST ON THE DEBT, SPENDING ON PROGRAMS FOR

SENIORS

The report showed that U.S. military spending in April rose

$6 billion, or 10% from a year earlier, to $73 billion. A U.S.

Treasury official said that the total reflected some outlays

related to the Iran war, but that the increase was spread across

a number of categories, including personnel and maintenance

costs, research and development operations, and procurement.

For the first seven months of fiscal 2026, which ends on

September 30, military spending was up $22 billion, or 4%, to

$531 billion.

Gross interest on the public debt in April rose $10

billion, or 10%, to $112 billion, a new monthly record amid

growing debt levels, the Treasury official said. Year-to-date

gross interest costs also hit a record for the first seven

months of a fiscal year, at $734 billion, up $50 billion, or 7%,

from the year-ago period.

Outlays for Social Security and the Medicare healthcare

system for seniors also grew from the year-earlier period.

Social Security outlays were up $7 billion, or 5%, to $145

billion in April and rose $50 billion, or 5%, to $995 billion in

the fiscal year-to-date period.

Medicare outlays rose $8 billion, or 8%, to $105 billion

last month from the year-earlier period, while fiscal

year-to-date outlays were up $52 billion, or 8%, to $710

billion.

But outlays for the Medicaid healthcare program for the

poor, which has suffered major budget cuts under the current

Trump administration, fell $2 billion, or 4%, to $56 billion in

April, from the year-earlier period. For the first seven months

of fiscal 2026, Medicaid outlays were up $31 billion, or 8%, to

$409 billion.