FY26 Budget Status: What You Need to Know

Author: Abbey Woomer

The Federal government's fiscal year 2026 budget remains in active development, with significant movement in Congress but no final passage as of late 2025. Here's where things stand and what it means for federal agencies and programs.

Current Status of the FY26 Budget

As of July 21, 2025, the federal Fiscal Year 2026 budget has not been fully passed. While both chambers of Congress have made substantial progress on individual appropriations bills, the complete budget package awaits final approval. FY2026 officially began on October 1, 2025, creating pressure for lawmakers to finalize funding or resort to temporary measures.

 The budget process involves multiple complex steps. It begins with the President's budget request, moves through budget resolutions in both chambers, and culminates in 12 separate appropriations bills that must pass both the House and Senate before reaching the President's desk.

Congressional Progress So Far

Both the House and Senate have advanced several key spending bills, though their approaches differ significantly.

 The House has passed appropriations bills for defense, homeland security, and veterans affairs, with the VA bill already advancing to the floor. House committees have also released spending measures for agriculture, legislative branch operations, and multiple other departments including Interior, Transportation, Housing and Urban Development, State, Commerce, Energy, and Justice.

 Senate appropriations committees have taken a more bipartisan approach, with their agriculture and legislative branch bills receiving nearly unanimous approval. The Senate's measures generally maintain current spending levels or provide modest increases, contrasting with the House's more aggressive reduction targets.

Key Budget Highlights

The FY26 budget proposals include several significant changes from current spending levels.

Defense spending would see a substantial increase under the administration's proposal, reaching over $960 billion when combined with supplemental reconciliation funding. This represents a 13 percent increase focused on strengthening homeland security, deterring threats in the Indo-Pacific, and revitalizing the defense industrial base. 

However, non-defense discretionary spending faces significant reductions. The President's budget proposes cutting base non-defense spending by $163 billion a 22.6 percent decrease from current levels. These cuts target programs the administration considers wasteful or misaligned with current priorities.

 Several agencies would experience dramatic changes. The Environmental Protection Agency faces a proposed 23 percent reduction, while the National Institutes of Health could see cuts of nearly $18 billion. The State Department and international programs would experience an 83.7 percent reduction in their current form, though some functions would shift to new funding mechanisms.

Likelihood of Delays and Continuing Resolutions

Historical precedent suggests the October 1st deadline for complete budget passage was always ambitious. Congress rarely manages to pass all 12 appropriations bills by the start of the fiscal year, instead typically relying on continuing resolutions to maintain government operations.

 These short-term funding measures allow agencies to continue operating at previous year levels while negotiations continue. The complexity of current budget negotiations, combined with significant policy disagreements between chambers, makes continuing resolutions increasingly likely.

 The administration has requested substantial additional funding through reconciliation—a special budget process that requires only a simple majority in the Senate. This $325 billion package would provide supplemental resources for defense and border security activities, though its passage remains uncertain.

 What This Means Moving Forward

The extended budget process creates uncertainty for federal agencies and their stakeholders. Without final appropriations, agencies must operate under restrictive continuing resolution guidelines that limit new initiatives and long-term planning.

 The stark differences between House and Senate approaches will require extensive negotiation. While the House has pursued more aggressive cuts aligned with the administration's priorities, the Senate's bipartisan measures suggest a more moderate final outcome may emerge.

 Agencies should prepare for potential funding disruptions and continue operating under current authorities until final appropriations are enacted. The timeline for resolution depends largely on political negotiations and the willingness of congressional leadership to find compromise solutions.