The US budget deficit for the 2014 fiscal year will be an estimated $506 billion, according to the Congressional Budget Office.

That represents a slight increase from the $492 billion projected in April and is based on lower-than-expected corporate tax receipts.

US budget deficits are expected to remain less than 3% of GDP right up to 2018 but will grow after that, rising to nearly 4% of GDP in 2022.

The reason behind the expected increase is that revenues will grow only slightly faster than the economy and spending is projected to increase more rapidly, the budget agency said.

The CBO said a substantial amount of slack remains in the US labour market due to the lower participation rate and an elevated number of people working part time.