The US federal budget deficit increased $US70 billion ($A66.45 billion) in July and is on track to top $US1 trillion for the fourth straight year.
The Treasury Department says the deficit for the first 10 months of the 2012 budget year, which ends on September 30, totalled $US974 billion.
That's 11.5 per cent less than the same period last year. A slightly better economy has boosted income tax receipts.
Still, President Barack Obama will almost certainly face re-election after running $1 trillion deficits each year in office.
Opposing candidate Mitt Romney has criticised Obama for failing to cut the deficit in half, as he pledged to do during his 2008 campaign.
The White House last month forecast the budget gap will total $US1.2 trillion this year, down from $US1.3 trillion last year.