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The President Releases Fiscal Year 2026 Budget Request
On May 2, 2025, the Trump Administration released its 2026 Budget Request. As a reminder, this is a budget request. The House and Senate, which are under Republican control, will be responsible for advancing government funding through the appropriations process.
The President is proposing $163 billion in non-discretionary budget authority for FY26; a 22.6% reduction of current year spending. At the same time, the budget calls for a 13% increase in defense and border spending, an increase of $1.01 trillion for defense of $1.01 trillion and $175 million for homeland security.
The FY ‘26 budget request is separate from the reconciliation package (the “Big Beautiful Bill”), however, under the proposal, a portion of the increases to Defense and Homeland Security, at least $325 billion, assumed in the budget resolution recently agreed to by the Congress would be provided through reconciliation.
Top Lines:
Small Business Administration:
The Trump Administration’s budget proposes to cut the Small Business Administration (SBA) budget by approximately $287 million, a 33.2% reduction from the 2025 enacted level— The FY26 budget request is $600M in discretionary funding, which compares to $900M enacted in FY25 (and $1.1B in FY24.) This reduction does not include cuts to supplementary disaster assistance funding. SBA’s total discretionary resources would drop to about $700 million in FY26 under the President’s proposal compared to about $1.3 billion in FY 25.
The Budget proposal ends 15 entrepreneurial development programs, leaving only the Small Business Development Centers (SBDCs) program. Small Business Development Centers (SBDCs) would receive a $10 million funding increase to “ensure there is not a disruption in business technical assistance services for veteran-owned businesses”.
U.S. Department of Treasury:
The Trump Administration’s budget proposal includes a 6.7% increase in discretionary funding for the U.S. Department of the Treasury, raising it to $12.1 billion.
The budget proposes eliminating CDFI Fund discretionary awards based on the premise that “past awards may have made race a determinant of access to loan programs to ‘advance racial equity’, funded projects and services that built so-called ‘climate resiliency’ and framed American society as inherently oppressive rather than fostering unity.” Remaining funding will support oversight and closeout of prior awards, maintaining CDFI certification, and support for New Markets Tax Credit administration and the zero cost Bond Guarantee Program
The budget does not include specifics on reductions within the IRS, but does mention “the elimination of certain complex tax credits and tech improvements to increase IRS efficiency.”
Department of Commerce - Minority Business Development Agency (MBDA):
The President’s budget proposes the elimination of the MBDA, by zeroing out the proposed funding. The budget justification frames this cut as eliminating programs deemed duplicative or contrary to the Administration’s priorities.
It is highly unlikely that the President’s budget will be adopted, however, the budget does provide a clear perspective as to the philosophy of the Administration.
Meet The Author:
As Vice President for Government Relations and Public Affairs, I work to explain how actions on Capitol Hill can impact the self-employed. I love D.C. and have made my home in Capitol Hill, where I live with my husband and black Labrador, Coltrane. We love playing volleyball and softball on the National Mall.
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