Why it Matters

The fiscal year 2025 budget reconciliation law already requires states with high payment error rates to shoulder a portion of benefit costs beginning in fiscal 2028, but a draft farm bill under consideration would delay that date and reshape the cost-sharing formula in ways that could strain state budgets significantly, according to a new Congressional Research Service report published August 4.

Historically, SNAP benefits have been entirely federally financed, with administrative costs split roughly evenly between Washington and the states. The reconciliation law already mandates that states cover 75 percent of administrative costs starting October 1, 2026. The proposed farm bill would add another layer of financial responsibility by pushing back the onset of benefit cost-sharing by one year and increasing the maximum share certain states would owe.

The Big Picture

States are ranked by payment error rates, which measure the dollar value of both over- and under-payments to households as a percentage of total benefit payments. The system uses data from the SNAP quality control program, which samples households in each state to verify eligibility and benefit accuracy.

Under current law, states with error rates below 6 percent pay nothing toward benefits. Those with rates between 6 and 7.99 percent pay 5 percent of costs. The shares climb to 10 percent for rates between 8 and 9.99 percent, and 15 percent for rates of 10 percent or higher. Cost-sharing was slated to begin October 1, 2027.

The draft farm bill would postpone the start date to October 1, 2028, and boost the maximum state share to 20 percent beginning in fiscal 2031. The fiscal year 2028 benefit cost-sharing percentage will be based on the lowest payment error rates from fiscal year 2025 or fiscal year 2026. In subsequent years, the percentage would be determined by the payment error rate from three years prior.

Political Stakes

Based on payment error rates released by the USDA in June, most states would face some level of cost-sharing under current law, with only states below the 6 percent threshold retaining fully federal financing. States with error rates at or above 13.33 percent qualify for delays under existing rules.

The House-passed version of the 2026 farm bill contains no SNAP cost-sharing provision at all, signaling resistance to the concept among some lawmakers.

The Bottom Line

The USDA has not yet issued regulations or guidance on how state cost-sharing will operate in practice, leaving substantial uncertainty about implementation. The SNAP cost-sharing changes are part of a proposed 2026 farm bill scheduled for Senate committee consideration on August 6. The outcome will determine whether states must begin carving SNAP benefit costs from other budget priorities within the next two years or face an indefinite extension of the current federal financing model.

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