The U.S. national debt is owned by a mix of federal trust funds, the Federal Reserve, foreign governments and private investors abroad, and a large group of domestic holders that includes mutual funds, banks, insurers, pension plans, state and local governments, and individual Americans. As of mid-2025, gross federal debt exceeded $36 trillion, split between roughly $7.3 trillion in intragovernmental holdings and more than $28 trillion in debt held by the public. Who owns U.S. debt matters because the mix of creditors shapes interest costs, market dynamics, and how much of the interest bill stays inside the country.
The Two Big Buckets
Every Treasury security sits in one of two categories. Debt held by the public covers everything owned outside the federal government: foreign central banks, mutual funds, pension plans, insurance companies, individual investors, state and local governments, and the Federal Reserve. This is the portion that trades in credit markets and directly influences interest rates.
Intragovernmental holdings are the money the federal government owes to its own trust funds. When a program like Social Security runs a surplus, the cash goes to the Treasury for general spending, and the trust fund receives special-issue Treasury securities that don’t trade on the open market. Those IOUs are backed by the full faith and credit of the United States, but redeeming them later still requires the government to raise taxes, cut spending, or borrow from the public.
Federal Trust Funds
Social Security is the largest internal creditor by far. The Old-Age and Survivors Insurance Trust Fund held about $2.5 trillion in special-issue Treasuries at the end of 2024, and the Disability Insurance Trust Fund held another $183 billion.1Social Security Administration. Trustees Report Summary Together, Social Security accounts for roughly a third of intragovernmental debt. Federal law requires those surplus funds to be invested in interest-bearing government obligations.2American Academy of Actuaries. The Relationship Between Social Security and Federal Government Deficits and Debt
Other sizable internal holders include federal employee retirement funds at about $1 trillion, Medicare’s Hospital Insurance Trust Fund at roughly $400 billion, and the Military Retirement Fund. Each operates the same way: surplus revenue is parked in non-marketable Treasury securities until beneficiaries need it.
The Federal Reserve
The Federal Reserve held approximately $4.4 trillion in Treasury securities as of March 2026, making it one of the single largest holders of federal debt.3Federal Reserve Board. Factors Affecting Reserve Balances – H.4.1 The Fed doesn’t buy Treasuries as an investment. It buys and sells them in the secondary market to steer interest rates and manage the money supply, working through the Federal Open Market Committee.4eCFR. 12 CFR Part 270 – Open Market Operations of Federal Reserve Banks
After the 2008 financial crisis and again during the 2020 pandemic, the Fed bought trillions in Treasuries through quantitative easing, expanding its balance sheet to pull down long-term rates. That process has reversed. Starting in 2022, the Fed began quantitative tightening, letting maturing securities roll off without reinvesting the proceeds. The runoff pace started at $60 billion per month in Treasuries and was cut sharply in April 2025 to just $5 billion per month.
Interest the Fed earns on its Treasuries normally flows back to the Treasury Department after operating costs, often tens of billions a year. The sharp rate increases in 2022 and 2023 flipped that arrangement: the Fed’s interest expenses outran its income, producing a cumulative deferred asset of $242 billion by late 2025.5Federal Reserve Board. November 2025 – Federal Reserve Balance Sheet Developments Until that shortfall is worked through, remittances back to the Treasury stay minimal.
Foreign Governments and Investors
Foreign entities held more than $9.2 trillion in Treasury securities by the third quarter of 2025, or roughly a third of all debt held by the public.6Federal Reserve Bank of St. Louis. Federal Debt Held by Foreign and International Investors The category spans foreign central banks managing currency reserves and private foreign investors looking for safety and liquidity.
Japan is the largest foreign holder at about $1.2 trillion, followed by the United Kingdom at roughly $895 billion.7U.S. Department of the Treasury. Major Foreign Holders of Treasury Securities China, once the top foreign creditor, has steadily reduced its position over the past decade and held about $652 billion as of early 2026. A few smaller jurisdictions also rank high, including Luxembourg, the Cayman Islands, and Belgium. Their totals don’t reflect those countries’ own wealth. They serve as custodial hubs for international investment funds, so the actual beneficial owners are often investors from elsewhere whose money flows through intermediaries based there.
The Treasury tracks all of this through the Treasury International Capital reporting system, which compiles monthly data on foreign holdings of U.S. securities.8U.S. Department of the Treasury. Treasury International Capital (TIC) System Foreign demand for Treasuries is tied to the dollar’s role as the world’s primary reserve currency. The size of the U.S. economy and its deep capital markets create what the Federal Reserve describes as an “unmatched” depth and liquidity in dollar-denominated assets.9Federal Reserve. The International Role of the U.S. Dollar – 2025 Edition
Domestic Private Investors
The largest share of debt held by the public sits with domestic private investors: mutual funds, money market funds, commercial banks, insurance companies, pension funds, and individuals. Together, these holders account for trillions in Treasury securities.
Mutual funds and money market funds hold Treasuries to stabilize portfolios and meet daily redemptions. Commercial banks keep large positions as part of reserve management. Insurance companies buy Treasuries to match reliable assets against long-term policyholder claims. Private pension funds gravitate toward Treasuries because their managers are bound by fiduciary duties under ERISA to invest prudently on behalf of participants.10Office of the Law Revision Counsel. 29 U.S. Code 1104 – Fiduciary Duties
Individual Americans can buy Treasury securities directly through TreasuryDirect, the government’s online platform for savings bonds, bills, notes, bonds, TIPS, and floating-rate notes.11TreasuryDirect. About TreasuryDirect Series I savings bonds, which adjust for inflation, are capped at $10,000 per person per calendar year in electronic purchases.12TreasuryDirect. About U.S. Savings Bonds Marketable securities like T-bills and notes have no practical cap for individuals and can be sold before maturity on the secondary market, though that requires transferring them to the commercial book-entry system through a broker.13TreasuryDirect. FAQs About Treasury Marketable Securities
State and Local Governments
State and local governments hold billions in Treasury securities as part of their cash management. Property tax collections and federal grants often sit in Treasury bills until they’re spent, earning a return while staying liquid. State pension funds for teachers, police officers, and firefighters also allocate a share of their assets to Treasuries.
These governments also have access to a specialized instrument called State and Local Government Series securities, or SLGS. They exist to help municipal bond issuers comply with IRS rules that restrict how tax-exempt bond proceeds can be invested. SLGS securities are structured to keep those investments within the yield limits the tax code requires.14TreasuryDirect. About the State and Local Government Series Securities
What It Costs to Service All These Creditors
Net interest on the federal debt hit $1.2 trillion in fiscal year 2025, driven by a larger debt stock and higher rates.15U.S. Government Accountability Office. Financial Audit – Bureau of the Fiscal Service FY 2025 and FY 2024 That figure now exceeds what the government spends on defense. Every percentage point added to average borrowing costs sends tens of billions more each year to whichever institutions, governments, and households hold the securities. The composition of ownership determines where that money lands, and how much of the interest bill stays in the domestic economy versus flowing abroad.