Who Owns the Majority of U.S. Debt: Domestic vs. Foreign Holders

Americans own most of the U.S. national debt. Domestic holders — U.S. investors, banks, mutual and pension funds, the Federal Reserve, and federal trust funds — collectively hold roughly two-thirds of the roughly $38.8 trillion in outstanding federal debt as of February 2026.¹ Foreign governments and international investors hold about $9.3 trillion, or less than a quarter of the total.²

How the Debt Is Split

Federal debt divides into two categories. Debt held by the public — everything the government has borrowed from anyone outside itself — accounts for about 80 percent of the total, roughly $31.1 trillion. That bucket includes individual investors, mutual funds, pension plans, commercial banks, insurance companies, the Federal Reserve, and foreign holders.¹

The remaining 20 percent, about $7.7 trillion, is intragovernmental holdings: money the government owes its own trust funds and agency accounts.¹ When Social Security and other programs run surpluses, the extra cash is invested in special Treasury securities and used for general operations, with the Treasury recording an obligation to repay later.

Domestic Holders

The Federal Reserve

The single biggest domestic holder is the Federal Reserve, which held roughly $4.3 trillion in Treasury securities in late February 2026.³ The Fed buys and sells Treasuries to manage interest rates and the money supply. Since mid-2022, it has been shrinking the portfolio it built up during the pandemic; its holdings relative to the size of the economy fell by about 14 percentage points between March 2022 and December 2025.⁴

Institutional Investors

Mutual funds and private pension funds hold hundreds of billions in Treasuries as the stable core of retirement portfolios. Commercial banks buy them to meet regulatory liquidity requirements and to protect depositor funds. Insurance companies favor longer-dated bonds because the payout schedule lines up with obligations they expect to pay decades out. For all of these institutions, Treasuries are attractive because they carry virtually no credit risk.

Individual Investors

Households can buy directly from the government through TreasuryDirect, with electronic savings bonds starting at $25.⁵ Annual purchase limits apply — each person can buy up to $10,000 in electronic Series I savings bonds per calendar year.⁶ Retail ownership supplies a steady stream of domestic capital that is less sensitive to global market swings.

Foreign Holders

Foreign governments, central banks, and private international investors together hold about $9.3 trillion in Treasury securities based on Treasury International Capital data for December 2025.² Large as that figure is, it remains a minority stake.

The Biggest Foreign Creditors

Japan holds roughly $1.19 trillion, making it the largest single foreign holder.
The United Kingdom holds approximately $866 billion.
China holds about $684 billion, a position that has declined notably in recent years as its central bank has diversified reserves.
Luxembourg, a hub for international investment funds, holds around $435 billion.²

Why Foreign Governments Buy Treasuries

Foreign central banks hold Treasuries mainly for liquidity and safety. The U.S. Treasury market is the deepest and most active bond market in the world, so a central bank can sell holdings quickly during a financial emergency. Treasuries are also considered among the safest assets available, and a diversified position provides a hedge against global uncertainty.⁷ Strong foreign demand also helps keep U.S. borrowing costs lower than they would be otherwise.

What the Government Owes Itself

The $7.7 trillion in intragovernmental holdings is dominated by the Social Security trust funds. At the end of 2024, the Old-Age and Survivors Insurance fund held about $2.54 trillion and the Disability Insurance fund held roughly $183 billion, for a combined balance of about $2.72 trillion.⁸ Those balances reflect decades of payroll tax surpluses invested in special Treasury securities. Other large intragovernmental holders include the federal employee retirement funds managed by the Office of Personnel Management and the Military Retirement Fund.

The Social Security funds are now paying out more than they collect. The Congressional Budget Office projects that the OASI trust fund will be exhausted by 2032 and the combined OASI and DI funds by 2033.⁹ Exhaustion would not eliminate benefits; ongoing payroll tax revenue would still cover roughly three-fourths of scheduled payments absent legislative action.¹⁰

Why the Ownership Mix Matters

Every dollar of debt carries interest, and those payments have grown into one of the largest items in the federal budget. The CBO projects net interest costs of about $1.04 trillion in fiscal year 2026, equal to roughly 3.3 percent of GDP.¹¹ Interest now makes up about 14 percent of all federal spending.¹² Because domestic holders own most of the debt, the majority of that interest flows back to Americans — Fed remittances to the Treasury, income to U.S. pensioners and savers, and credits back to federal trust funds — rather than leaving the country.

Federal debt held by the public is projected to equal 101 percent of GDP in 2026 and to climb to 120 percent by 2036.¹¹ As that ratio rises, the debt grows faster than the economy that supports it, which can push interest rates higher over time regardless of who holds the securities.

1
U.S. Treasury Fiscal Data. Debt to the Penny
2
Treasury International Capital. Major Foreign Holders of Treasury Securities
3
FRED – Federal Reserve Economic Data. U.S. Treasury Securities Held by the Federal Reserve – All – Wednesday Level
4
The Fed. A Decomposition of Balance Sheet Reduction
5
TreasuryDirect. Manage Bonds – TreasuryDirect
6
TreasuryDirect. How Much Can I Spend/Own?
7
Federal Reserve Bank of New York. The Important Role of the Foreign Investor in the U.S. Treasury Market
8
Social Security Administration. Trustees Report Summary
9
CBO.gov. Social Security Trust Funds Baseline
10
Social Security Administration. Proposals to Change Social Security
11
Congressional Budget Office. The Budget and Economic Outlook: 2026 to 2036
12
U.S. Treasury Fiscal Data. Federal Spending