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Unlike many government agencies, the United States Postal Service (USPS) does not receive direct taxpayer funding for operating expenses. Government appropriations are limited to specific purposes, such as the Postal Service Health Benefits (PSHB) Program.
Despite modernization efforts, the USPS faces financial challenges, with a projected net loss of $6.9 billion for fiscal year 2025. The “Delivering for America” plan remains a key strategy for addressing these challenges and ensuring long-term financial sustainability.
Primary Sources of USPS Funding in 2025
Sales of Postage
The sale of postage for various mail classes remains fundamental to USPS funding in 2025. In 2025, a First-Class Mail stamp costs $0.73 for a one-ounce letter.
The Fiscal Year 2025 Integrated Financial Plan projects a total revenue of $82.9 billion, with postage sales playing a crucial role. Despite declining First-Class Mail volume, strategic price increases have helped maintain and even grow revenue in this segment.
Shipping and Packages
Package delivery has become an increasingly vital funding source for the USPS, particularly with e-commerce expansion. Services like Priority Mail, Priority Mail Express, and USPS Ground Advantage are key contributors.
The USPS’s First Quarter Fiscal Year 2025 results show increased revenue from Shipping and Packages, highlighting this sector’s growing importance.
To compete with private carriers, the USPS is launching new services and optimizing existing ones, such as “Next Day Priority” and Ground Advantage, focusing on the expanding parcel delivery market.
Other Products and Services
The USPS generates additional revenue from international mail services, periodicals delivery, and miscellaneous services. The “Other” revenue category amounted to $928 million in the first quarter of fiscal year 2025.
Ancillary services such as Certified Mail, Return Receipt, Registered Mail, and Signature Confirmation provide additional revenue streams. The USPS continues to explore new service offerings, such as the expanded USPS Connect suite and “Next Day Priority,” which are expected to contribute to future revenue growth.
Government Appropriations and Subsidies in 2025
The USPS typically does not receive direct taxpayer funding for day-to-day operations. However, the Postal Service Health Benefits (PSHB) Program is a notable exception.
The Fiscal Year 2025 budget request for the PSHB Program includes a continuation of the 2024 appropriation increase. These funds are specifically allocated for the operation of the PSHB program, managed within the Office of Personnel Management’s Trust Fund Transfers.
A proposed legislative measure aims to secure future funding for the PSHB program’s eligibility determination and enrollment systems beyond FY 2025.
These government appropriations are designated for postal retirees’ healthcare benefits and do not represent subsidies for the USPS’s general operating costs.
Other Revenue-Generating Services and Products
Beyond delivering letters and postcards, the USPS offers various services and products that contribute significantly to revenue:
- The Shipping and Packages segment includes services like Priority Mail, Priority Mail Express, and USPS Ground Advantage
- International mail services facilitate cross-border mail and package exchange
- Periodicals delivery generates revenue from publishers
- Ancillary services include Certified Mail, Return Receipt, Registered Mail, and Signature Confirmation
- The USPS continues to innovate with services like “Next Day Priority” and expanded USPS Connect offerings
The first quarter of fiscal year 2025 showed $928 million in “Other” revenue, encompassing various miscellaneous services and products.
Financial Challenges and Deficits in 2025
Despite improvement efforts, the USPS continues to face significant financial challenges in 2025. The agency projects a net loss of $6.9 billion for the fiscal year, with a controllable loss estimated at $1.1 billion.
These anticipated deficits stem from:
- Persistent decline in mail volume, particularly First-Class Mail
- Rising employee compensation and benefits costs
- Increasing depreciation expenses
This situation follows a $9.5 billion net loss in Fiscal Year 2024, highlighting continued financial pressures. While the USPS reported a rare net profit of $144 million in the first quarter of Fiscal Year 2025, this positive result is not expected to offset the overall financial challenges for the remainder of the year.
These ongoing financial struggles persist despite the implementation of the “Delivering for America” plan, indicating the complexity of achieving long-term financial sustainability.
Recent and Proposed Changes to the USPS Funding Model
The “Delivering for America” plan remains the primary driver of changes to the USPS funding model in 2025. This comprehensive strategy aims to modernize the Postal Service and achieve long-term financial sustainability.
Key components include:
- Significant cost reductions
- Strategic revenue growth
- Enhanced network efficiency
- Establishment of Regional Processing and Distribution Centers (RPDCs) and Sorting and Delivery Centers (S&DCs)
- Fleet transition to electric vehicles
In 2025, the USPS is implementing refined service standards for certain market-dominant services, projected to save at least $36 billion over the next decade.
The USPS is actively expanding its package delivery business through new services and competitive pricing strategies to capitalize on e-commerce growth.
While discussions about potential USPS privatization have resurfaced with the upcoming presidential administration, such a fundamental change to the funding model is unlikely to occur in 2025.
USPS Revenue by Service Category – Q1 2025
| Service Category | Revenue Q1 2024 (in $ millions) | Revenue Q1 2025 (in $ millions) |
|---|---|---|
| First-Class Mail | 6,721 | 7,005 |
| Marketing Mail | 4,139 | 4,589 |
| Shipping and Packages | 9,079 | 9,351 |
| International | 429 | 384 |
| Periodicals | 238 | 242 |
| Other | 1,008 | 928 |
| Total Operating Revenue | 21,614 | 22,499 |
Projected USPS Financial Outlook for FY 2025
| Financial Metric | Projected Value (in $ billions) |
|---|---|
| Total Revenue | 82.9 |
| Total Controllable Expenses | 84.0 |
| Net Loss | -6.9 |
| Controllable Loss | -1.1 |
Select USPS Postage Rates in 2025 (Retail)
| Postage Type | Rate in 2025 |
|---|---|
| First-Class Mail Letter (1 oz.) | $0.73 |
| Postcard | $0.56 |
| Priority Mail Flat Rate Envelope | $10.10 |
| USPS Ground Advantage (1 lb.) | $8.35 |
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