Why the Federal Fiscal Year Starts Oct. 1, and Why It Rarely Helps
Congress moved the fiscal year to October 1 in 1974 to buy itself three more months. Fiscal 2027 began this month on a stopgap anyway.
Four. That is how many times since 1977 Congress has finished all of its annual spending bills before the federal fiscal year began on October 1, according to a Pew Research Center tally: fiscal 1977, 1989, 1995 and 1997. Keep that number in mind, because the October start date exists for one reason above all others. It was supposed to give lawmakers enough time to get the budget done.
Fiscal 2027 opened on Thursday, October 1, 2026, and right on schedule the government is not running on a finished budget. It is running on a stopgap. The continuing resolution signed on September 2 funds agencies through December 11, 2026, according to the Committee for a Responsible Federal Budget's appropriations tracker. So the question people type into search boxes every autumn has a sharper edge this year: why October at all?
Why does the federal fiscal year start in October?
Because a 1974 law moved it there. Section 501 of the Congressional Budget and Impoundment Control Act (Public Law 93-344, now codified at 31 U.S.C. 1102) shifted the start of the federal fiscal year from July 1 to October 1, beginning with fiscal 1977. The goal, as the Cyclopedia of Congressional Budget Law summarizes it, was "to provide Congress with more time to process appropriations legislation, particularly to avoid continuing resolutions."
Three extra months. That was the whole idea.
The same law created the House and Senate Budget Committees, the Congressional Budget Office and the annual budget resolution, a whole new layer of process that had to fit in before appropriators wrote the actual spending bills. Moving the deadline from midsummer to early autumn gave that sequence room to breathe, at least on paper.
President Richard Nixon signed it in the Oval Office on July 12, 1974. His remarks at the signing, preserved by the American Presidency Project, framed it as a cooperative fix:
"What this bill does is to provide a means whereby the Congress and the Executive, not only now but in administrations to come, will work together to keep the budget from getting out of control."
President Richard Nixon, July 12, 1974
There is some irony in that line. The "impoundment control" half of the law exists to stop presidents from withholding money Congress has appropriated, and it was back in the spotlight during the 2025 federal grant pause, when the Government Accountability Office opened dozens of investigations under it. A separate statute, the Antideficiency Act, governs what agencies may do in a shutdown once the money stops.
When did the fiscal year change from July 1 to October 1?
The switch did not happen overnight; it took a 92-day bridge. The federal government originally kept its books on the calendar year. In 1842, President John Tyler signed legislation moving the fiscal year to a July 1 to June 30 cycle, and that held for more than a century.
To get from July to October without leaving a hole in the books, Congress created what budget people still call the transition quarter, or "TQ": the three months from July 1, 1976, to September 30, 1976, sitting between fiscal 1976 and fiscal 1977. The Fiscal Year Transition Act (Public Law 94-274, signed April 21, 1976) provided for the changeover.
From October 1, 1976, onward, the federal fiscal year has run from October 1 of one year to September 30 of the next, and it is named for the year in which it ends. That is why the budget fight happening this autumn is about "fiscal 2027."
Did the October start actually fix anything?
The record says no, or not for long. Fiscal 1977, the first full year under the new calendar, is one of only four years when every appropriations bill was enacted on time. Since fiscal 1998, Pew found, there has been an average of 117 days between the start of a fiscal year and the date that year's final spending bill became law. That is almost four months. Congress moved the finish line back by three months and then, on average, blew past the new one by nearly four.
The reason is not the calendar. A deadline only works if missing it costs something, and continuing resolutions made missing it cheap. A stopgap keeps agencies open without settling the fight, so the deadline turns into a vote on whether to extend the deadline. The difference between a continuing resolution and an omnibus matters more every year: the CR has quietly become the default way Washington funds itself.
This year fits the pattern. As of the CRFB tracker's September update, the House had passed three of its fiscal 2027 bills (Military Construction-VA, Agriculture, and National Security-State) and the Senate had passed none. The stopgap was enacted with wide margins, 370-48 in the House and 90-6 in the Senate, which tells you how routine the maneuver has become.
Do states use the same fiscal year as the federal government?
Almost none do. According to the National Conference of State Legislatures, 46 states began fiscal 2026 on July 1, 2025, the same start date Washington abandoned in 1976. The exceptions are New York (April 1), Texas (September 1), and Alabama and Michigan, which start on October 1 like the federal government.
That mismatch has real consequences. A state budget office building its numbers in May and June is guessing at federal grant money that Congress may not settle until the following winter. Other countries pick different dates for their own reasons; Japan's government, for one, runs its fiscal year from April, a choice with its own historical logic.
Would moving the fiscal year again help?
History is not encouraging. The 1974 reformers had a real diagnosis: the July deadline arrived before Congress could finish a newly elaborate process. Their cure bought time, and the time got absorbed. Any future proposal to shift the date, or to switch to two-year budgets, will run into the same problem that October 1 did. The calendar can be redrawn by statute. The incentive to wait until the last possible moment cannot.
Which leaves the date itself as something closer to a starting gun than a finish line. On October 1, the fiscal year begins whether the budget is ready or not. Most years it isn't, and the real deadline for fiscal 2027 is now December 11.
