As of February 2026, the United States owed roughly $38.79 trillion, and the question of who the U.S. owes money to has a specific answer: federal trust funds, the Federal Reserve, domestic investors and institutions, and foreign governments.1U.S. Treasury Fiscal Data. Debt to the Penny The Treasury sorts every dollar of that borrowing into two buckets. About $31.13 trillion is debt held by the public, meaning creditors outside the federal government. About $7.66 trillion is intragovernmental holdings, which is money the government owes to its own internal accounts.2U.S. Treasury Fiscal Data. Understanding the National Debt
Federal Trust Funds Are the Largest Internal Creditor
The $7.66 trillion in intragovernmental holdings sits inside federal trust funds set up for specific programs, mostly retirement and healthcare.1U.S. Treasury Fiscal Data. Debt to the Penny When those programs collect more in taxes or premiums than they pay out, the surplus is invested in special-issue Treasury securities. That is not a policy choice but a legal requirement: the Secretary of the Treasury must invest any trust fund balance not needed for immediate withdrawals in interest-bearing obligations of the United States.3Office of the Law Revision Counsel. 26 USC 9602 – Management of Trust Funds Those special-issue securities earn interest but cannot be traded on the open market.
Social Security is the largest of these internal creditors. Its trust funds held about $2.8 trillion in Treasury securities as of fiscal year 2024.4U.S. Department of the Treasury. Financial Report of the United States Government For decades, payroll taxes flowing into the Old-Age and Survivors Insurance fund and the Disability Insurance fund exceeded annual benefit payments, and the surpluses were loaned to the rest of the government through Treasury securities.5Social Security Administration. What Are the Trust Funds Medicare’s trust funds hold another $399.4 billion.
Federal employee retirement adds significantly to the internal debt. The Civil Service Retirement and Disability Fund, run by the Office of Personnel Management for retired federal civilians, and the Military Retirement Fund inside the Department of Defense are both large creditors.6Office of the Law Revision Counsel. 5 USC 8348 – Civil Service Retirement and Disability Fund Defense also maintains a separate fund covering healthcare benefits for Medicare-eligible military retirees.7Trump White House Archives. Trust Funds and Federal Funds Interest from the general fund is credited back to each of these accounts.
One caveat on this internal debt: it depends on the trust funds still holding a surplus. Social Security has already crossed the point where benefits exceed incoming payroll taxes, and it now redeems its Treasury securities to cover the shortfall. The 2025 Trustees Report projects that the Old-Age and Survivors Insurance Trust Fund can pay full scheduled benefits only until 2033, or 2034 if combined with the Disability Insurance fund.8Social Security Administration. Trustees Report Summary After that, payroll taxes would still come in, but only a portion of scheduled benefits could be paid unless Congress acts.
The Federal Reserve Holds Trillions in Treasuries
The Federal Reserve held about $4.32 trillion in Treasury securities as of late February 2026, making it one of the single largest creditors of the United States.9Board of Governors of the Federal Reserve System. Factors Affecting Reserve Balances – H.4.1 Although the Fed is a government-created institution, it operates outside the federal accounts, so its holdings count as debt held by the public rather than intragovernmental debt.10Board of Governors of the Federal Reserve System. FEDS Notes – Federal Debt in the Financial Accounts of the United States
The Fed acquires those securities through open market operations, buying them from private dealers on the secondary market to influence interest rates and the money supply. Interest earned on the portfolio flows back to the Treasury as remittances, after the Fed covers its operating costs, dividends to member banks, and interest on its own liabilities.11Congressional Budget Office. Recent Changes to CBO Projections of Remittances From the Federal Reserve In practice, that reduces the net cost to taxpayers of the portion of the debt held by the central bank.
The size of the Fed’s Treasury portfolio shifts with policy decisions. Starting in June 2022, the Federal Open Market Committee let maturing securities roll off the balance sheet without reinvestment, cutting total securities holdings by more than $2.2 trillion, including roughly $1.6 trillion in Treasuries. On October 29, 2025, the FOMC announced it would stop the runoff effective December 1, 2025, and resume rolling over all maturing Treasury securities at auction.12Board of Governors of the Federal Reserve System. Policy Normalization
Domestic Investors and Institutions
A large share of the public debt sits with American investors, both institutional and individual. The main categories include:
- Mutual funds, which buy Treasury bills, notes, and bonds as low-risk holdings inside portfolios owned by millions of investors.
- Private pension funds that invest in Treasuries to generate steady returns for future retirees.
- Insurance companies that hold Treasuries as stable, high-quality assets against long-term policyholder obligations.
- State and local governments that park surplus revenue in Treasuries for short-term cash management.
- Commercial banks, which hold Treasuries in part to meet the liquidity coverage ratio, a rule requiring regulated institutions to keep enough high-quality liquid assets to cover potential cash outflows.13eCFR. 12 CFR 249.10 – Liquidity Coverage Ratio
Individuals lend to the government too. Through TreasuryDirect, you can buy Series I and Series EE savings bonds along with marketable Treasury securities without going through a broker.14TreasuryDirect. Buying a Treasury Marketable Security Many more people hold federal debt indirectly through 401(k) accounts, IRAs, and brokerage bond funds.
The securities themselves come in several forms. Treasury bills mature in 4, 8, 13, 17, 26, or 52 weeks and are sold at a discount to face value rather than paying periodic interest.15TreasuryDirect. Treasury Bills Treasury notes run 2, 3, 5, 7, or 10 years and pay interest every six months.16TreasuryDirect. Treasury Notes Treasury bonds mature in 20 or 30 years, also with semiannual interest. Series I savings bonds carry a rate that adjusts for inflation; for bonds issued between November 2025 and April 2026, the composite rate was 4.03%, combining a 0.90% fixed rate with an inflation-adjusted component.17TreasuryDirect. I Bonds Interest Rates Interest on all Treasury securities is subject to federal income tax but exempt from state and local income taxes.18Internal Revenue Service. Topic No. 403 – Interest Received
Foreign Governments and Investors
Foreign creditors hold a large slice of the public debt. Treasury tracks these holdings through the Treasury International Capital reporting system.19U.S. Department of the Treasury. Description of the Treasury International Capital (TIC) System As of December 2025, the largest foreign holders were:
- Japan: $1,185.5 billion
- United Kingdom: $866.0 billion
- China: $683.5 billion
- Belgium: $477.3 billion
- Canada: $468.1 billion
- Luxembourg: $435.1 billion
Foreign central banks and sovereign wealth funds buy Treasuries largely because the U.S. dollar is the world’s dominant reserve currency and the Treasury market is the deepest bond market in existence, allowing large positions to be bought and sold quickly. Dollar-denominated assets also help these countries manage their own exchange rates and maintain reserves for financial emergencies.
The country totals come with a caveat worth understanding before drawing conclusions from them. TIC records holdings by where the transaction takes place, not where the ultimate owner is located.19U.S. Department of the Treasury. Description of the Treasury International Capital (TIC) System A security bought through a custodian in London, Luxembourg, or Belgium may actually belong to an investor somewhere else. That is one reason smaller financial hubs sometimes rank near the top.
What the Government Pays These Creditors
Every creditor described above earns interest, and the federal government has to pay it. The Congressional Budget Office projected that net interest payments would reach roughly $1 trillion in fiscal year 2026, up about $69 billion, or 7%, from 2025.21Congressional Budget Office. The Budget and Economic Outlook – 2026 to 2036 That equals about 3.3% of GDP.
Two factors drive the interest bill: how much total debt is outstanding, and the rates the government pays on it. When rates rise, rolling over maturing debt into new securities costs more. Even at steady rates, a bigger debt stock means a bigger annual interest obligation. CBO put the primary deficit, meaning the gap between spending and revenue before interest costs, at 2.6% of GDP for 2026, so interest alone now accounts for a substantial share of the total deficit.22Congressional Budget Office. The Budget and Economic Outlook – 2026 to 2036