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The U.S. government incurs debt when it issues Treasury securities to fund the deficit between the amount of money that it receives in taxes and other revenues versus the amount of money that it spends on defense, welfare programs, interest, and more. As of July 24, 2025, the government’s total debt is $36.72 trillion. The foreign countries that hold the most U.S. debt are Japan, the United Kingdom, China, the Cayman Islands, and Canada as of May 2025.
Key Takeaways
- The Bureau of the Fiscal Service classifies national debt as intragovernmental debt and debt held by the public.
- About four-fifths of the total national debt is public debt, which includes Treasury holdings by foreign countries.
- Japan is the largest foreign holder of public U.S. government debt, owning $1.13 trillion in debt as of May 2025.
- The U.K. ranks second in total U.S. debt owned by foreign countries, with China, the Cayman Islands, and Canada rounding out the top five.
- The total national debt is $36.72 trillion as of July 24, 2024.
Types of Debt
U.S. national debt is categorized as intragovernmental debt and public debt. Intragovernmental debt is debt held within the U.S. by federal agencies and entities. It makes up about a fifth of the total outstanding U.S. debt. This debt includes money owed to Social Security, military retirement funds, Medicare, and other retirement funds.
The remainder is public debt. Foreign governments hold a large portion of the public debt, while the rest is owned by U.S. banks and individual investors, the Federal Reserve, state and local governments, mutual funds, pension funds, insurance companies, and holders of savings bonds.
As of July 24, 2025, $29.36 trillion of the national debt is held by the public.
Important
Congress sets a ceiling on the debt that can be raised periodically. On Dec. 16, 2021, the debt ceiling was raised by $2.5 trillion to $31.4 trillion. This is the largest dollar amount increase in the national debt. In June 2023, the debt ceiling was suspended by Congress until 2025 as the national debt passed the $31.4 trillion mark.
1. Japan
Japan held $1.13 trillion in Treasury securities as of July 2025, beating out the U.K. as the largest foreign holder of U.S. debt.
2. The United Kingdom
British investors hold $809.4 billion of U.S. debt as of July 2025. The U.K.’s investment in U.S. debt may be linked to its difficult economic situation.
3. China
China gets a lot of attention for holding a big chunk of the U.S. government’s debt. Given that its economy expanded rapidly in the last decades, perhaps this shouldn’t come as a surprise. China dropped down from second to the third spot among foreign holders of U.S. debt with $756.3 billion in Treasury holdings as of July 2025.
While Chinese-owned debt is frequently drummed up as a political talking point, there’s nothing particularly sinister about an export-oriented economy investing in Treasury securities. Treasuries are a logical investment for a country with high foreign currency reserves.
Fast Fact
The largest owner of U.S. debt by far is actually the U.S. government, which holds Treasury securities in various government accounts and pension funds.
4. Cayman Islands
The Cayman Islands is a global tax haven. Many investment firms are headquartered in the Cayman Islands, holding a big chunk ot the U.S. Treasuries. As of July 2025, the Cayman Islands holds $441.3 billion of U.S.
5. Canada
The U.S.’s neighbor to the north, Canada, rounds out the list of the top five holders of U.S. debt. As of May 2024, the Great White North holds $430.1 billion of U.S. debt, making up 4.75% of the total.
Who Owns U.S. Debt Besides Foreign Governments?
Other holders of U.S. national debt include U.S. banks and investors, state and local governments, mutual funds, pension funds, insurance companies, and investors in savings bonds. Various agencies and entities within the U.S. government also own debt, which is known as intragovernmental debt.
What Is the Current National Debt?
As of July 24, 2025, the U.S. national debt is $36.72 trillion. At the end of 2019, before the COVID-19 pandemic, the national debt was $23 trillion. One year later, it rose to $27.7 trillion. Since then, it has steadily increased.
Why Is the National Debt So High?
The national debt is so high because the U.S. continues to spend more than it receives in revenue. Therefore, it must issue more debt to cover the difference. The national debt is an accumulation of federal budget deficits. Every spending program and tax cut adds to the debt, unless paid for by new appropriations.
Why Is the U.S. in Debt to China?
The U.S. doesn’t restrict who may buy its securities. China invests in U.S. debt because of the positive effect these low-risk, stable investments can have on its economy. By investing in dollar-denominated securities, the value of the dollar increases relative to the value of China’s currency, the yuan. This, in turn, makes Chinese goods cheaper and more attractive than U.S. goods to buyers. That increases sales and strengthens the economy.
The Bottom Line
U.S. Treasury securities are considered to be some of the most liquid and safest assets in the world. For this reason, and because a majority of global trade is conducted in U.S. dollars, many countries hold U.S. debt as an investment.
