The federal deficit rose $79 billion to $666 billion, the Treasury Department reported Friday.
It was the largest government shortfall since 2013.
Altogether, government spending totaled $3.98 trillion for the year. Revenues clocked in at $3.32 trillion.
While both spending and revenues ran at record highs in dollar terms, they both appeared to slip as a share of the economy. Total taxes and other revenues totaled 17.3 percent of gross domestic product, down 0.4 percent points and the lowest since 2014. Spending also fell 0.2 percentage points to 20.7 percent of the economy.
The Trump administration blamed the higher deficit on slow economic growth.
"Today's budget results underscore the importance of achieving robust and sustained economic growth," Treasury Secretary Steven Mnuchin said in a statement. "Through a combination of tax reform and regulatory relief, this country can return to higher levels of GDP growth, helping to erase our fiscal deficit."
After a burst of spending during the recession, the deficit bottomed out in 2015, as the economy continued its long recovery from the financial crisis. In 2016, President Obama's last year, the deficit began to climb in dollar terms and relative to the economy, and has continued to do so throughout President Trump's early tenure.
"These numbers should serve as a smoke alarm for Washington, a reminder that we need to grow our economy again and get our fiscal house in order," Office of Management and Budget director Mick Mulvaney said. We can do that through smart spending restraint, tax reform, and cutting red tape."
The Congressional Budget Office, Congress' in-house group of budget experts, expects the deficit to shrink in fiscal year 2018. But then in the years ahead the annual shortfalls are projected to steadily increase, thanks to growing federal expenditures on retirement and old-age health care programs.
From around 3.5 percent of gross domestic product today, the annual shortfall will increase to more than 5 percent over the course of the next decade, according to the budget office. The federal debt will grow from 77 percent of GDP to 91 percent.
Those projections assume that the government won't make major changes to taxes or spending.
Trump and congressional Republicans moved this week toward a budget that could allow for tax cuts of up to $1.5 trillion in the next 10 years. Administration officials, however, have said that the tax plan will generate enough additional economic growth to bring in new revenues sufficient to offset those tax cuts, or even eclipse current anticipated tax revenues.
Democrats, however, warn that the tax cuts will only expand the deficit. "With the deficit as large and growing as quickly as it is, Republicans pursuing a reckless plan that would blow a huge hole in the deficit and put Medicare and Medicaid at risk is the height of irresponsibility," Senate Minority Leader Charles Schumer of New York said. "Instead, Republicans should work with Democrats on tax reform that is deficit neutral and focused on the middle class."