Earlier this month, the White House published their recommendations for the Fiscal Year (FY) 2026 budget request. This request was sent to Congress to keep in mind as funds are allocated for the FY2026 budget. This year, the request rings in at $1.7 trillion, 22.6% percent below current FY2025 spending. The White House is requesting cuts to civilian spending and increases to defense spending, which aligns with their current priorities. Let’s dive into the budget request so we can get a sneak peek into what federal government spending trends could look like for FY2026.
The White House FY2026 Budget Request
It’s not a surprise that there’s a decrease in spending overall. The Trump Administration has made clear in several Executive Orders (EOs) that the mission is to cut inefficient and unnecessary functions in the federal government and save taxpayer money.
The White House has identified line items from the FY2025 budget where they think the spending isn’t needed, and in turn has proposed non-defense discretionary budget requests $163 billion less than current year’s spending. The defense budget request increased by 13%. We’ll go into more detail below.
Increased Spending in the FY2026 White House Budget Request
First, let’s cover the federal agencies receiving the highest requests for increased budgets:
- Department of Defense (DoD): 13.4%--This increase is requested to strengthen the borders and the U.S. Defense Industrial Base (DIB).
- Department of Veterans Affairs (VA): 17.3%--Increase budget for healthcare services, case management and support services, and decreasing veteran homelessness.
- Department of Homeland Security (DHS): 64.9%--Part of this budget request is wrapped up in the reconciliation bill, a bill later this year that would bring $325B of additional funding. This increase is for the border wall, advanced border security technology, modernizing Coast Guard fleet, and enhancing Secret Service protection.
- Department of Transportation (DoT): 5.8%--Increases in the Federal Aviation Administration (FAA), Infrastructure for Rebuilding America Program (INFRA), Rail Safety and Infrastructure Grants, and Shipbuilding and Port Infrastructure.
As mentioned in the increased funding for the DoD, the White House intends to enact a reconciliation bill later this year that will add an additional $325B (including $175B for border/non-defense and $150B for defense).
If you are a customer of these agencies or offer solutions that align with the increases mentioned, we encourage you to frequently monitor any upcoming opportunities as the spending priorities continue to shift. Remember, FY2026 starts October 1 in the federal government, so it’s less than 6 months away. But you won’t have to wait until then to start seeing scores of solicitations roll in. The Q4 spending spree starts in July, where the federal government rushes to spend about 1/3 of their remaining budgets, and we can certainly expect to see similar spending trends to the ones we’re anticipating for FY2026.
Related Increases to Note for FY2026
There are some specific increase requests to note within the agencies above, especially if you’re an IT contractor. Under the DoT, there is a $359 million increase for the Federal Aviation Administration (FAA). This is intended for FAA operations, and additional funds will be used to modernize the FAA’s telecommunications system. Additionally, $824 million is requested to be set aside for the modernization of the systems and facilities in the U.S. National Airspace System.
The National Oceanic and Atmospheric Administration (NOAA) budget is requested to be cut overall, but the White House proposes to rescope $209 million to fit the Geostationary and Extended Observations Satellite program.
Lastly, the Trump Administration wants the VA to add $2.2 billion for Electronic Health Record Modernization. However, they also suggest cutting $493 million from IT systems. The White House notes this is because they anticipate a new approach to modernizing legacy systems under the Department of Government Efficiency (DOGE).
Proposed Spending Cuts in the FY2026 White House Budget Request
As the White House reviewed FY2025 spending, they made several recommendations for cuts. Let’s review some of the cuts and where spending may be reallocated, so we can see where agencies will be focusing their missions next year.
- Department of Health and Human Services (HHS): -26.2%--Most notably, the White House plans to cut Centers for Disease Control (CDC) and National Institute of Health (NIH) funding and reallocate some of the dollars for their Make America Healthy Again (MAHA) mission.
- Department of Energy (DoE): -9.4%--The request cuts $15 billion in funding for the Infrastructure Investment and Jobs Act (IIJA) among other areas. This funding comes from unplanned/unobligated balances, so it won’t impact currently awarded contracts.
- Department of the Treasury (TREAS): -19%--Most notably, the White House suggests $2.4 billion in cuts to the IRS, stating that the elimination of certain complex tax credits and technology improvements would increase IRS efficiency. Some of these funds will be reallocated to the Rural Financial Award Program.
- Department of Education (ED): -15.3%--The department is still intact in this request, but the White House requests $4.5 billion in cuts for the Title I and K-12 Programs. There is a requested increase for $60 million to increase the charter schools in the country.
These do not represent all the agencies, but gives a good snapshot of what we can anticipate with spending in the next fiscal year. Of course, this is all part of a budget request, so these percentages and dollar signs are not set in stone right now.
Preparing for Q4 and the Next Fiscal Year
Now’s the time to start preparing your strategy for Q4 and FY2026. If you already have a GSA Schedule, you should ensure all your products and services are updated including pricing, and you are staying compliant with all other aspects of your contract. Don’t wait to make changes to your contract—Schedule modifications may take longer with the major shift GSA is planning for right now. If you don’t currently have a contract, you should start thinking about one ASAP. If you want to start going after opportunities soon before you’re able to acquire your own GSA Schedule, you can look into partnering with a GSA reseller like Winvale. Wherever you are at in your GSA Schedule journey, we are here to help.
