KEY TAKEAWAYS
- The ‘One, Big, Beautiful Bill’ expands work requirements and shifts more costs of the Supplemental Nutrition Assistance Program to states.
- Shifting more costs to states may force them to cut funding for SNAP and other welfare programs.
- Households that have their SNAP benefits reduced or cut off entirely will have to reduce spending on food and other discretionary items.
Millions of households could struggle to afford groceries after cuts to the Supplemental Nutrition Assistance Program go into effect.
The ‘One, Big, Beautiful Bill’ will reduce federal spending on SNAP by $186 billion over 10 years, as calculated by Oxford Economics. Additional changes, some of which could start this year, include expanding work requirements for beneficiaries and forcing states to fund more of the program.
Currently, about 42 million people, or about 12% of the U.S. population, receive benefits from the federal welfare program, which provides benefits to help low-income families afford food.
How States’ Budgets Will Change
Currently, the cost of administering SNAP is split by states and the federal government. But starting in 2027, state governments will have to pay 75% of the administration costs for SNAP.
Additionally, starting in the 2028 fiscal year, states will have to pay a percentage of the program’s food costs if they make errors in administering SNAP, such as overpayments or underpayments. Previously, the federal government paid all of the food costs.
They’ll also have more responsibilities outside of SNAP, since the ‘One, Big, Beautiful Bill’ shifts more Medicare costs to the states.
This might force some states to cut funding for SNAP and other welfare programs. For example, Texas has already cut a summer lunch program for low-income children, citing uncertainty about federal matching for the program and other food welfare programs, according to the Texas Tribune.
How Household Budgets Will Change
Cuts to the program and expansion of work requirements will most impact households with income in the bottom 20%, which receive about 85% of total SNAP benefits, estimates Oxford Economics, using the Congressional Budget Office and Department of Agriculture data.
Oxford Economics projects that by 2034, the lowest-income households will use SNAP to pay for 55% of their food, compared to 91% in 2023. That means that some lower-income families, who typically spend a higher share of their income on food, may have to reduce the amount of food they consume.
Additionally, families may need to use their savings or rely on credit cards and loans to pay for groceries. However, lower-income households have a harder time getting credit and typically have less in savings.
Oxford Economics estimates that the SNAP cuts will force families to cut spending on discretionary items by about 8%, if they don’t dip into savings or increase borrowing. Once the SNAP cuts kick in, low-income households will most likely reduce spending on things like vehicle purchases, food outside of the home, and entertainment.
Affected households will also have to shift how and where they buy food. Many will buy more store-brand groceries or choose cheaper grocery stores. However, lower-income families are already more likely to choose store-brand options, and these households typically have difficulty accessing a variety of stores.