WASHINGTON—The U.S. government's deficit over the next decade will be smaller than previously forecast, as a protracted period of low interest rates has slowed the increase of debt payments, the Congressional Budget Office said on Wednesday.

The difference between revenue and spending is now forecast to be more than $400 billion smaller through 2024 than the agency estimated in April. Still, the cumulative deficit would be substantial, reaching $7.2 trillion over the same period. While interest payments on the debt will be...