CBO: US Iran war costs hit $38 billion, could reach $3 billion monthly

The Congressional Budget Office reported on Tuesday that the United States' war against Iran has cost the Department of Defense roughly $38.1 billion as of Aug. 1, with projections indicating monthly expenses could escalate to $3 billion depending on the intensity of ongoing hostilities.

Cost breakdown and monthly projections

CBO Director Phillip Swagel detailed the expenditures in a letter to House Budget Committee Ranking Member Brendan Boyle on Tuesday. The $38.1 billion figure covers replacement of expended munitions and lost equipment, increased flying hours, fuel costs, and other operations tied to Operation Epic Fury, which began Feb. 28 with US-Israeli strikes on Iran.

Replacing munitions consumed the largest share at $21.7 billion, including $13.1 billion specifically for missile defense interceptors. Future monthly costs depend heavily on combat intensity—remaining at approximately $2 billion if hostilities match the lower levels seen in May and June, but climbing to $3 billion should fighting reach July's intensity, Swagel stated.

Discrepancies with administration estimates

The CBO's estimate runs roughly 10% below the Administration's supplemental funding request of $42.3 billion for directly related costs. It also falls beneath Defense Secretary Pete Hegseth's July projection of $37.5 billion through September, a gap Swagel attributed to differing methodologies and incomplete data from the Pentagon.

These variations underscore the challenges of precise wartime accounting six months into the campaign. The office emphasized that its figures capture only direct military expenditures rather than broader economic consequences.

Economic impact and conflict origins

The conflict has pushed global oil and fuel prices higher due to disruptions in the Strait of Hormuz, feeding into elevated inflation and interest rate projections through 2027. These macroeconomic effects extend beyond the Defense Department's operational budget.

The US and Israel launched large-scale attacks against Iran on Feb. 28, targeting government buildings, military sites, missile infrastructure, and air defenses. Iran responded with missile and drone strikes against Israel and US bases across the region, expanding the war as diplomatic efforts to end hostilities continue.