The majority of the national debt is held by U.S. domestic investors, including private individuals and institutions, and the U.S. government itself. Foreign countries own about a quarter of the total debt, with Japan and China being the largest foreign holders. 

As of late 2024, the approximate distribution of U.S. debt holders is: 

• U.S. Private Investors (42%): A wide range of domestic entities hold U.S. debt, including mutual funds, pension funds, banks, insurance companies, and individual Americans through savings bonds.
• Intragovernmental Accounts (20%): These are U.S. government trust funds that invest surplus money in Treasury securities. The largest of these include the Social Security trust funds and federal employee and military retirement funds.
• The Federal Reserve (13%): The U.S. central bank holds a portion of the debt as part of its monetary policy operations to stabilize financial markets and influence interest rates.
• Foreign Investors (25%): The remaining debt is held by foreign governments, central banks, private institutions, and individuals. 

Major foreign holders of U.S. debt

The largest foreign holders of U.S. debt as of late 2024 and early 2025 include: 

• Japan: $1.13 trillion
• United Kingdom: $809.4 billion
• China: $756.3 billion
• Cayman Islands: $441.3 billion
• Canada: $430.1 billion 

Key factors to remember

• Largest overall holder: The U.S. government itself, through its intragovernmental trust funds, is technically the largest single holder of the national debt.
• Safest investment: U.S. Treasury securities are considered one of the world’s safest investments, which is why they are so attractive to foreign governments and other investors.
• Domestic vs. foreign ownership: While foreign ownership receives significant attention, domestic investors—both public and private—hold the largest share of U.S. debt. 

At the end of December 2024, the nation’s gross debt totaled $36 trillion. Of that amount, $29 trillion, or 80 percent, was debt held by the public — representing cash borrowed from domestic and foreign investors. The remaining $7 trillion (20 percent) was intragovernmental debt, which simply records transactions between one part of the federal government and another.

Debt Held by the Public

Economists generally view debt held by the public (DHBP) as the most meaningful measure of debt, because it reflects the amount that the Treasury has borrowed from outside lenders through financial markets to support government activities. At high levels, DHBP can crowd out private investments in the economy, make it more difficult to respond to economic crises, and increase volatility within the economy.

As of the end of December 2024, DHBP was $28.7 trillion, or approaching 97 percent of GDP. That borrowing came from both domestic and foreign creditors, with the former holding more than two-thirds of it.

Domestic Holders of Federal Debt

Domestic holdings of federal debt have increased notably over the past decade, rising from $7.0 trillion in December 2014 to $20.3 trillion at the end of December 2024. The Federal Reserve, which purchases and sells Treasury securities as a means to influence federal interest rates and the nation’s money supply, is the largest holder of such debt.

In fact, the central bank doubled its holdings of Treasury securities during the COVID-19 pandemic as part of its effort to mitigate the economic impact of the pandemic. However, since June 2022, the Fed has been reducing the size of its balance sheet in response to high inflation and to adjust its needs related to conduct of monetary policy.

Other domestic holders of public debt include investment funds (mutual and pension funds), commercial banks and other depository institutions, state and local governments, insurance companies, and other corporations and individuals.

Foreign Holders of Federal Debt

Foreign ownership of U.S. debt, which includes both governments and private investors, is now much higher than it was 50 years ago. In 1970, total foreign holdings accounted for $14.0 billion, or just 5 percent, of DHBP. As of December 2024, such holdings made up $8.5 trillion, or 30 percent, of DHBP. Because Treasury securities are backed by the full faith and credit of the U.S. government, creditors including foreign investors often view lending to the United States as a safe investment.

In recent years, however, the foreign share of DHBP has declined due to the rapid growth in purchases by the Federal Reserve in response to the economic effects of the COVID-19 pandemic. Foreign holdings were 49 percent of DHBP in 2011.

Investors in Japan and China hold significant shares of U.S. public debt. Together, as of December 2024, they accounted for $1.8 trillion, or 6.3 percent of DHBP. While the holdings of U.S. debt by both countries have declined over the past decade, China’s purchases of U.S. Treasury securities have declined more so than Japan’s. Investors in many other countries — including the United Kingdom — have increased their holdings of U.S. debt as well.

Foreign ownership of U.S. debt can have implications for the nation’s economy and financial markets. When foreign investors purchase Treasury securities, the federal government must send income abroad in the form of interest payments. On the one hand, that foreign investment may help increase U.S. economic activity if the money borrowed from such investors is used for productive purposes, such as stimulating recovery from a recession or funding investments in the nation’s economy. On the other hand, some analysts note that more foreign-owned debt reduces the control of financial markets in the United States and more income sent abroad means less is available for domestic investors.

As of October 2018, foreigners owned $6.2 trillion of U.S. debt, or approximately 39% of the debt held by the public of $16.1 trillion and 28% of the total debt of $21.8 trillion. In December 2020, foreigners held 33% ($7 trillion out of $21.6 trillion) of publicly held US debt; of this $7 trillion, $4.1 trillion (59.2%) belonged to foreign governments and $2.8 trillion (40.8%) to foreign investors. Including both private and public debt holders, the top three December 2020 national holders of American public debt are Japan ($1.2 trillion or 17.7%), China ($1.1 trillion or 15.2%), and the United Kingdom ($0.4 trillion or 6.2%).

Historically, the share held by foreign governments had grown over time, rising from 13% of the public debt in 1988 to 34% in 2015. In more recent years, foreign ownership has retreated both in percent of total debt and total dollar amounts. China’s maximum holding of 9.1% or $1.3 trillion of U.S. debt occurred in 2011, subsequently reduced to 5% in 2018. Japan’s maximum holding of 7% or $1.2 trillion occurred in 2012, subsequently reduced to 4% in 2018.

According to Paul Krugman, “America actually earns more from its assets abroad than it pays to foreign investors.” Nonetheless, the country’s net international investment position represents a debt of more than $9 trillion.

Intra-governmental Debt

Intragovernmental debt records a transfer from one part of the government to another, and therefore has no net effect on the government’s overall finances. As of December 2024, intragovernmental debt totaled $7.7 trillion, a $2.5 trillion increase from a decade ago. In almost all cases, such debt is held in government trust funds — accounting mechanisms to track money designated for a specific purpose or program.

The largest holder of intra-governmental debt is the Social Security Old-Age and Survivors Insurance Trust Fund, which holds $2.5 trillion, or 33 percent of intra-governmental debt, as of December 2024. Other accounts holding such debt include retirement funds for federal employees, Medicare’s Hospital Insurance Trust Fund, and the Highway Trust Fund.

What Does All This Debt Mean For the Federal Budget and the Economy?

The amount of federal debt issued to the public can affect the country’s fiscal and economic health in a number of ways. The nation’s high and rising levels of such debt can affect economic growth and poses a number of risks; it could:

• Reduce private investment and slow the growth of the economy
• Increase interest payments to foreign holders, thereby potentially reducing national income
• Elevate the risk of a fiscal crisis
• Lead to higher interest rates
• Constrain lawmakers from implementing policies to respond to crises or invest in the future
• Impede intergenerational equity by shifting debt to future generations and potentially restraining their ability to access public goods and services

Until lawmakers in Washington agree on a fiscally sustainable approach to the federal budget, public debt will continue to rise — threatening important safety net programs as well as domestic and foreign confidence in U.S. markets that can eventually chip away at economic opportunities for Americans.

Factcheck

Who Holds Our Debt?

Q: Who are the holders of U.S. debt?

A: The biggest are the Social Security trust funds (16 percent), the Federal Reserve banks (12 percent), China (8 percent), Japan (7 percent) and mutual funds including money-market funds (6 percent).

FULL QUESTION

I keep hearing about the debt ceiling and the U.S. borrowing more. Who are the holders of U.S. debt? Meaning who, exactly does a country of our size borrow money from? Thanks.

FULL ANSWER

Our primary source is Table OFS-2 in the September issue of the Treasury Bulletin, which can be found under the heading “Ownership of Federal Securities.” For additional details, we’ve also drawn on reports of the Federal Reserve System and other U.S. Treasury documents.

As of the end of March 2013 — the most recent period for which the Bulletin provides a breakdown — total federal debt stood at $16.8 trillion. It has since grown to nearly $17.2 trillion, but the share of debt held by various lenders cannot have shifted by much.

The largest portion of the total debt — about 40 percent — was held by federal government accounts plus the Federal Reserve banks. Since 2009, the Federal Reserve banks have been sharply increasing their holdings of Treasury securities to stimulate the economy, and as of March 31, they held just under $2 trillion of the national debt, or about 12 percent. The federal government accounts include the two Social Security trust funds, which together hold 16 percent of the total federal debt. Other federal government accounts include the federal civil service retirement and disability fund (5 percent of total debt), the military retirement fund (3 percent), the Medicare hospital insurance fund (1 percent), and several other smaller funds.

Another 34 percent of total federal debt is owed to foreigners, including China (which owned nearly $1.3 trillion of the total debt, or about 8 percent), closely followed by Japan, which owned $1.1 trillion, or 7 percent. Previously, Japan had been the top foreign owner of U.S. debt, but China surpassed Japan in September 2008. Other major foreign lenders are various Caribbean banking centers including the Cayman Islands (2 percent altogether), various oil-exporting nations including Saudi Arabia (2 percent altogether) and Brazil (2 percent).

The remainder of the total federal debt is spread among mostly private, domestic investors, including 6 percent owned through mutual funds, such as money-market funds. Another 3 percent is owned by state and local governments. The remaining 17 percent is spread among banks and other depository institutions (2 percent), owners of U.S. savings bonds (1 percent), private pension funds (3 percent), state and local pension funds (1 percent), and insurance companies (2 percent), with the remaining 9 percent held by various “individuals, Government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and other investors,” according to the Treasury.