First Look: The Second Trump Administration’s Discretionary Budget and Recommendations for FY 2026

On Friday, May 2, the White House published an outline of its recommendations for the coming discretionary budget request for fiscal year (FY) 2026. Totaling $1.7T, the recommended discretionary budget comes in 7.6% below the budget of $1.83T enacted for FY 2025. The recommended budget  contains a large number of cuts. Most of these align with the Administration’s stated priorities. 

The first thing to understand is that per the Office of Management and Budget, these are “recommendations on discretionary funding levels for fiscal year (FY) 2026.” Congress will take these numbers into consideration when putting together the final reconciliation bill that is currently being negotiated. To that end, here are the recommended funding levels.

Per the Administration’s stated priorities, the only departments that will see increases in their discretionary budgets under this proposal are Defense (+13.4%), Veterans Affairs (+17.2%), Homeland Security (+65%), Energy (+2.6%), and Transportation (+6.0%). Every other department and agency will see double-digit discretionary budget cuts except the Department of Justice, which will see a cut of 0.8%.

Another thing to know is that the recommendations for departments with asterisks beside their abbreviations include fiscal resources derived from the reconciliation bill. The Administration has assumed that the enactment of a reconciliation bill later this year will include at least $325B in additional resources (including $175B for border/non-defense and $150B for defense) to supplemental certain discretionary activities. For FY 2026, the Administration assumes a total of $163B will be available and allocated as follows: $113.3B for the DOD, $43.8B for the DHS, and $6.0B for the National Nuclear Security Administration. Lastly, the VA’s total also includes money for the Toxic Exposures Fund.

Here are some of the requested cuts:

• State: $2.5B due to USAID being rolled into the department.
• Education: The department remains intact, but will see a $4.5B cut to its Title I and K-12 programs.
• Health and Human Services: Cuts $4.0B from the Low Income Home Energy Assistance Program, $3.6B from the Centers for Disease Control and Prevention, and $18B from the National Institutes for Health in an effort to reform and “focus NIH research activities in line with the President’s commitment to Make America Healthy Again.
• Environmental Protection Agency: Cuts $2.5B from the clean and drinking water state revolving loan fund and other state grant programs.
• Treasury: Cuts $2.4B from the Internal Revenue Service and anticipates that technology improvements will increase the agency’s efficiency.
• Justice: Cuts $1.0B for state and local grant programs, and $545M as part of an initiative to reform and streamline the Federal Bureau of Investigation.
• Energy: Cuts $15B in funding awarded by the Infrastructure Investment and Jobs Act. This amount is from unplanned/unobligated balances, so it will not affect currently awarded projects.

Information Technology-Specific Cuts

Lastly, the proposal also contains a little information pertaining to IT programs. Some of these recommendations suggest additions, while others suggest cuts.

• Federal Aviation Administration: +$359M – Intended for FAA operations, the additional funds will also be directed at efforts to modernize the FAA’s telecommunications system. An additional $824M is slated for the modernization of the systems and facilities that comprise U.S. National Airspace System.
• National Oceanic and Atmospheric Administration: -$209M to rescope NOAA’s Geostationary and Extended Observations satellite program.
• Veterans Affairs: Provides $2.2B for Electronic Health Record Modernization while cutting -$493M from IT Systems in anticipation of a new approach to modernizing legacy systems being developed by the Department of Government Efficiency.