FY2026 Federal Budget Cuts: Top 10 Agencies Losing the Most Funding

Which federal agencies are facing the deepest cuts in FY2026 and what does it mean for government programs, grants, and services? The President’s proposed budget for Fiscal Year 2026 outlines sweeping reductions across a number of critical departments, with billions slashed from education, research, energy, and public welfare.

For contractors, public servants, policy analysts, and grant recipients, this proposal isn’t just political theater, it’s a potential blueprint for the year ahead.

This article breaks down the top 10 agencies facing the largest proposed cuts in both dollar terms and percentage reductions, with clear implications for federal spending priorities. Whether you're navigating procurement pipelines or managing public programs, understanding these shifts is essential.

Top 10 Federal Agencies Facing the Largest FY2026 Budget Cuts

1. Department of Education

   • Dollar Reduction: $10 billion

   • Percent of Budget Cut: Approximately 12% reduction

   • Description: Significant cuts to student aid programs and education grants.

2. National Institutes of Health (NIH)

   • Dollar Reduction: $4 billion

   • Percent of Budget Cut: Around 9% reduction

   • Description: Reduced funding for medical research grants and health initiatives.

3. National Science Foundation (NSF)

   • Dollar Reduction: $2.5 billion

   • Percent of Budget Cut: About 14% reduction

   • Description: Cuts affecting various science and engineering research projects.

4. Environmental Protection Agency (EPA)

   • Dollar Reduction: $2 billion

   • Percent of Budget Cut: Roughly 15% reduction

   • Description: Significant cuts to climate-related and environmental programs.

5. Department of Energy (DOE)

   • Dollar Reduction: $1.8 billion

   • Percent of Budget Cut: Around 8% reduction

   • Description: Cuts mainly in renewable energy and research programs.

6. Department of the Interior

   • Dollar Reduction: $1.2 billion

   • Percent of Budget Cut: About 10% reduction

   • Description: Reductions in land management and conservation funding.

7. Department of Labor

   • Dollar Reduction: $1 billion

   • Percent of Budget Cut: Roughly 7% reduction

   • Description: Cuts to training and employment services.

8. Department of Transportation

   • Dollar Reduction: $900 million

   • Percent of Budget Cut: About 6% reduction

   • Description: Reduced infrastructure grants and public transit funding.

9. Department of Housing and Urban Development (HUD)

   • Dollar Reduction: $850 million

   • Percent of Budget Cut: Approximately 5% reduction

   • Description: Cuts to housing assistance and urban development programs.

10. Department of Agriculture (USDA)

• Dollar Reduction: $700 million

• Percent of Budget Cut: Around 4% reduction

• Description: Reductions affecting food assistance and rural development.

What Happens Next?

While these proposed cuts reflect the administration’s fiscal and ideological priorities, they are far from final. Congress controls the purse strings, and in the months ahead, lawmakers will negotiate, amend, and likely restore funding to many of the areas facing reductions.

Still, the FY2026 budget proposal sends a strong signal about where the federal government may tighten spending and where opportunities for private sector partnerships, innovation, or advocacy may emerge.

Whether you're a government contractor adjusting your pipeline strategy, a public institution bracing for funding changes, or a policymaker analyzing federal priorities, understanding the details of this proposal is the first step in navigating what’s ahead.

Stay informed. Stay agile. And remember: budget season is far from over.

Looking for more shutdown survival strategies? Check out our related blog post:2025 Government Shutdown Showdown: What Small GovCon Businesses Need to Know (and Do) Right Now

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Sources:

• https://www.whitehouse.gov/wp-content/uploads/2025/05/Fiscal-Year-2026-Discretionary-Budget-Request.pdf

• https://www.whitehouse.gov/wp-content/uploads/2025/05/appendix_fy2026.pdf

• https://www.ed.gov/media/document/fiscal-year-2026-budget-summary-110043.pdf

• https://www.hhs.gov/sites/default/files/fy-2026-budget-in-brief.pdf

• https://www.dol.gov/sites/dolgov/files/general/budget/2026/FY2026BIB.pdf

• https://www.nasa.gov/fy-2026-budget-request/