The estimate, which covers the war’s direct costs through Aug. 1, is in line with the Pentagon’s most recent public accounting from July, when Defense Secretary Pete Hegseth told Congress that the war had cost $37.5 billion. A later report from the Defense Department's inspector general determined that conflict cost an estimated $33.4 billion between February 28 and June 30.
Taken together, the reports are a mixed bag for an Administration that has faced mounting questions over the consequences of a war President Donald Trump initially said would be over in a few weeks. Nearly $40 billion is a substantial sum, Democrats say, particularly at a time when the federal government is carrying more than $40 trillion in gross debt and most Americans consider affordability their top issue heading in the midterms. However, the estimate is considerably lower than some early projections of what the conflict could cost, giving the Administration an argument that the direct military price of the war has so far been more limited than some critics had feared.
The separate report from the Defense Department's inspector general, released a day before the CBO’s, estimated the cost of repairing "physical damage from Iranian strikes" to U.S. diplomatic facilities in Iraq, Kuwait, Saudi Arabia, and the UAE at approximately $184 million. It also determined that throughout Operation Epic Fury the U.S. military has spent $22.3 billion on munitions and has lost around $3.7 billion in aircraft and equipment, including four destroyed F-15 fighter jets, seven KC-135 tanker aircraft, a dozen damaged or destroyed KC-135 refueling aircraft, and the loss of up to 30 MQ-9 Reaper drones.
The CBO’s accounting gives members of Congress an independent assessment against which to judge the Trump Administration’s requests to continue funding its military campaign in Iran. As Congress’s nonpartisan fiscal scorekeeper, the CBO’s findings frequently become the benchmark lawmakers use to debate the consequences of tax and spending decisions. However, the CBO report notes that its own estimates “are subject to considerable uncertainty” because it relied on government databases and public reports as the Defense Department did not respond to the CBO’s requests for information.
Democrats were expecting the cost estimate to be higher than the CBO reached in its report, in part because they believed it would account for the cost of borrowing to finance the war. The $40 billion figure does not include debt service, or additional interest the government could pay over time.
Earlier this summer, the White House requested an additional $67.1 billion for the Pentagon, while House Republicans later advanced a spending framework containing roughly $73 billion in additional funding for defense and intelligence as Democrats pushed back, saying that they lack a clear picture of the war’s duration and ultimate requirements.
The CBO expects the war to add roughly 0.5 percentage points to inflation in the price index for personal consumption expenditures in the first quarter of 2027, driven largely by higher energy prices resulting from supply disruptions in the Strait of Hormuz and the Red Sea.
The pace of the war has ebbed and flowed in recent months, with sporadic bursts of fighting and attacks across the region. Shipping through the Strait of Hormuz remains disrupted, renewed attacks have threatened commercial vessels, and Houthi strikes on Saudi energy infrastructure have complicated efforts to move oil through alternative routes. The uncertainty has helped push oil prices back above $100 a barrel.
Trump has more recently asked Americans to accept higher prices as the cost of preventing Iran from acquiring a nuclear weapon. His assurances about the duration of that sacrifice, however, have changed. In March, he described the war as a “short-term excursion” that would end “soon.” Last week, speaking at a Republican convention in Dallas, he said the war would end “immediately after” the midterm elections.
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