Will the Latest USPS Rate Increase Finally Fix Their $100 Billion Deficit?

Millions of Americans woke up to higher mailing costs as the USPS officially raised the price of Forever stamps from 73 to 78 cents. The increase, effective July 13, 2025, marks one of the largest single jumps in postal history.

This 5-cent hike is part of the agency’s ongoing effort to address its deepening financial crisis. With over $100 billion in losses since 2007, the USPS is under mounting pressure to find a path to stability.

Can a 5-cent stamp hike solve the USPS’s financial crisis?

The latest price adjustment is projected to generate additional revenue, but the scale of the deficit is staggering. In the second quarter of 2025 alone, the USPS reported a net loss of $3.3 billion, nearly double the loss from the same period last year.

Despite the higher price, overall mail volumes continue to fall. First-Class Mail volume dropped 5.8% in the last quarter, and Marketing Mail declined 5.7%. Shipping and packages also saw a 6.9% decrease in volume, even as revenues inched up due to the rate increases.

Did you know?
The USPS has not reported a profit since 2006, and the price of a first-class stamp has more than tripled since 1985.

Will Americans face more postal rate increases in 2026?

The price hike is unlikely to be the last. Under the “Delivering for America” plan, USPS has signaled that twice-yearly rate increases could continue through 2026 and 2027. The agency projects a net loss of $6.9 billion for 2025, with controllable losses, those within management’s power, expected to reach $1.1 billion.

USPS leadership has warned that without continued cost-cutting and revenue growth, the agency could require a federal bailout. The financial plan assumes mail and package volume will continue to decline, making future increases almost inevitable.

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USPS losses keep mounting despite price hikes

Raising stamp prices has not reversed the trend of losses. The USPS lost $9.5 billion in fiscal 2024, and its losses for 2025 are already outpacing last year’s figures. Operating expenses are rising, driven by inflation, higher compensation, and actuarial adjustments for benefits.

Even with stable revenue of $19.7 billion in the last quarter, expenses climbed by $1.8 billion. The agency’s challenge is clear: price hikes have not been enough to offset falling mail demand and rising costs.

Cost-cutting and modernization are not enough for USPS

The USPS is working to modernize its infrastructure and cut costs, but progress is slow. The “Delivering for America” plan calls for $40 billion in capital investments and a major push to streamline operations. However, labor costs remain stubbornly high, making up about 75% of total expenses.

Recent efforts to convert temporary workers to permanent, unionized positions have added long-term costs. While automation and network improvements are underway, these measures have yet to produce the savings needed to balance the books.

The agency’s leadership insists that operational reforms, combined with pricing authority, are essential for survival. Yet critics argue that without deeper structural changes, the USPS may never achieve true financial health.

As Americans adjust to the new 78-cent Forever stamp, the future of the USPS remains uncertain. With more rate hikes on the horizon and losses mounting, the nation’s mail service stands at a crossroads, facing tough choices that will shape its next century.