States Race to Cut Food Stamp Errors Before Penalties Kick In

States are racing to reduce faulty payments to food stamp recipients, in a bid to avoid penalties included in the signature budget bill passed by Republicans last year.

Starting in October 2027, states with payment error rates of 6 percent or higher must cover 5, 10, or 15 percent of SNAP benefit costs, depending on the payment error rate.

Even though the deadline is more than a year out, enrollment in the program has dropped by more than 5 million recipients as a result of the stricter rules, according to Agriculture Secretary Brooke Rollins.

Forty-one states and the District of Columbia made improper payments of more than 6 percent in 2025, according to the Department of Agriculture. Nearly half of states will have to pay more than $100 million in penalties, according to publicly available federal data.

Just nine states fell below the 6 percent error threshold in the 2025 fiscal year: Idaho, Iowa, Kentucky, Nebraska, South Dakota, Utah, Vermont, Wisconsin, and Wyoming. 

Four states are considering dropping the food stamp program entirely as a result of the new rules, according to a survey by the American Public Human Services Association.

California, New York, and Florida would be responsible for more than $1 billion in SNAP costs if they failed to reduce their rates of erroneous payments. Texas would owe around $750 million.

For several states, however, a provision in the One Big Beautiful Bill delays the cost-sharing requirement for an additional two years. Nicknamed “the Alaska Carveout,” the provision allows states with improper payment rates of 13.34 percent or higher in fiscal 2025 to put off the cost-sharing requirement until fiscal 2029. 

Similarly, states exceeding that threshold in fiscal 2026 can put off cost-sharing until fiscal 2030. 

In addition to next year’s deadline, beginning this October, states will bear 75 percent of the costs to administer the food stamp program.That’s up from the 50 percent share paid by states since the program was started in 1964.

The tighter rules address a “financing mismatch” in the food stamp program, according to the Cato Institute, a policy research organization. For decades, states have processed SNAP applications and distributed benefits, while financial consequences have fallen overwhelmingly on federal taxpayers. That gives states little incentive to control waste and prevent fraud.

SNAP payment errors totaled more than $10 billion in 2025. More than 87 percent of that amount was due to overpayments.

‘Significant Waste’

SNAP is a federally funded program, administered by the states, that provides food benefits to low-income families. In 2025, federal taxpayers spent about $103 billion on SNAP benefits and nearly $7 billion in administrative fees.

With an overall error rate of 10.6 percent, nearly one in nine food stamp allotments went to an ineligible recipient or was paid in the wrong amount.

State agencies made improper payments mainly because they did not verify recipients’ eligibility criteria, such as citizenship, employment, finances, identity, residency, and household size, before making a payment, according to the Government Accountability Office.

Although the 2025 error rate decreased slightly from previous years, it still showed “significant waste” at the state level, according to a June statement from the Department of Agriculture.

Errors can stem from either state agencies or recipients. While state agencies can make mistakes when updating recipient information or processing payments, recipients may also forget to report income changes or additional family members.

Those are “honest mistakes” rather than intentional fraud, the Center on Budget and Policy Priorities said in a July report. Even so, the errors prove that “state accountability is severely lacking in SNAP,” Rollins said in a June statement.

After the One Big Beautiful Bill Act took effect in July 2025, participation in the food stamp program dropped 12 percent—more than 5 million—to 37 million this April, according to Department of Agriculture data released in July.

Rollins attributed the decline to the administration’s crackdown on fraud and ineligible recipients.

The downward trend may continue, as 11 states reported that they may narrow eligibility policies when costs change.

State Response

Error rates might not reflect the true picture of how a state distributes money, historical reports suggest.

A 2015 audit by the Office of Inspector General found that states hired outside consultants and error review committees to mitigate individual errors identified by quality control, rather than addressing the root causes of eligibility inaccuracies.

And in 2014, the Department of Agriculture could not validate state-reported error rates in 42 of 53 state agencies because of date-quality issues.

Nonetheless, a July survey of 39 states from the American Public Human Services Association found that agencies across the country are “working incredibly hard” to reduce error rates by addressing root causes.

States reported that they will invest in workforce training, root-cause analysis, and technology upgrades to improve payment accuracy.

Virginia, which would face 15 percent cost-sharing based on its 2025 errors, has stopped self-attestation of eligibility since the One Big Beautiful Bill Act passed.

It previously allowed applicants to self-report expenses and incomes.

Louisiana is offering a $1,500 bonus to staff who maintain an error rate of 4 percent or lower.

The agency is also automating checks on household income to reduce unintentional errors, which account for 62 percent of the state’s inaccuracies, according to the think tank Invest in Louisiana.

Mississippi is updating its 35-year-old eligibility systems to ensure program integrity, according to the Mississippi Department of Human Services.

Minnesota is investing millions of dollars to modernize decades-old technology used to administer state programs, according to the Minnesota House of Representatives.

Each change suggests that new financial accountability rules are making a difference, according to the American Enterprise Institute.

The American Public Human Services Association survey reported trade-offs for increased accuracy, including timeliness of benefit payments and a delay in EBT chip card implementation. 

And four states indicated that they may drop out of SNAP altogether or pause participation in the program as a result of the cost-sharing provisions. The survey report did not disclose which states are considering dropping out of the program.

The American Public Human Services Association did not respond to a request for comment.

The ‘Alaska Carveout’

Under the One Big Beautiful Bill Act, states with error rates at 13.34 percent or higher will secure a two-year delay in cost sharing. The “Alaska Carveout” provision was negotiated and secured by Sen. Lisa Murkowski (R-Alaska) prior to voting on the budget bill. 

In a July 2025 letter to Alaskans, Sen. Dan Sullivan (R-Alaska) said the state had worked hard to include delayed cost-sharing in the act because it had the highest payment error rate in the country.

The provision currently affects six states and the District of Columbia. Those include Alaska, New Mexico, Delaware, Georgia, Illinois, and Oregon.

But the exemption may precipitate a reverse effect by rewarding the worst-performing states while penalizing those working to reduce their error rates, according to a July report from the Cato Institute.

To delay penalties, states could slow efforts in correcting errors and keep improper payment rates elevated, according to the think tank.

Data Sharing

In an effort to overhaul fraud, waste, and abuse in government programs, the Trump administration is pushing to codify data sharing between states and the federal government. 

“We need to know where your tax dollars are going, and if the state of California and the state of New York aren’t going to tell us, we need Congress to force them to tell us,” Vice President JD Vance told a fraud task force roundtable on Aug. 5.

Technological verification and data-sharing measures can solve the majority of integrity problems in government programs, said Stephen Miller, White House deputy chief of staff for policy.

If the federal government had access to verify applicants’ biographical information, such as age, citizenship, and criminal record, “that single step alone would save taxpayers hundreds of billions of dollars,” Miller said.

A major problem with welfare benefits is that “databases are not integrated,” Robert Rector, a health and welfare policy fellow at The Heritage Foundation, told The Epoch Times.

“If you were to go to any state and ask a welfare administrator, or ask the governor, ‘Here’s the Smith family. They live on this street. How much do they receive in welfare?’—they can’t answer that,” Rector said.

There are dozens of welfare programs, and recipients are “typically receiving benefits from probably five or six programs at once,” Rector explained.

To avoid over-spending on welfare programs such as SNAP, he said, it “would be very good to be accurate about the benefits that are actually being received, correctly counting that, and reporting that in a way that the public would understand.”