Under standard federal budget categories, “net interest” is the government’s interest cost on the national debt after accounting for interest income, while “national defense” typically refers to budget function 050 (primarily the Department of Defense). Using those common definitions, American Action Forum reports net interest of about $970 billion in FY2025 compared with about $917 billion for national defense outlays, meaning interest costs were larger.
Other nonpartisan budget sources describe the same trend: the Peterson Foundation (citing CBO) projects interest costs around $1,039 billion in FY2026 and rising quickly over the next decade. Separately, FRED’s federal “interest payments” series shows interest costs at roughly a $1.23 trillion annualized rate in late 2025, which aligns with the broader point that interest has become one of the largest federal spending lines.
The comparison can change if someone uses an expanded definition of “defense” that adds related categories (for example, veterans’ programs or other security spending). But for the most common budget comparison used by Treasury/CBO-style reporting—net interest vs national defense outlays—the interest line is now slightly higher.