SNAP is funded almost entirely by the federal government today: the U.S. Treasury pays 100 percent of the food benefits that participants spend at the grocery store, and the federal government reimburses states for 50 percent of the cost of running the program. States cover the other half of administrative costs from their own budgets. That split is about to change. A 2025 law will cut the federal share of administrative costs to 25 percent in fiscal year 2027 and, for the first time in the program’s history, require some states to pay part of the actual benefit costs starting in fiscal year 2028.
In fiscal year 2024, total federal SNAP spending reached about $99.8 billion, covering benefits for an average of 42 million people per month.
The Federal Government Pays Every Dollar of Benefits
Under federal law, the Secretary of Agriculture administers SNAP and provides eligible households with a monthly food allotment funded entirely by the U.S. Treasury.1Office of the Law Revision Counsel. 7 USC 2013 – Establishment of Supplemental Nutrition Assistance Program No state or local government contributes to the benefit payments families use to buy groceries.
SNAP is mandatory spending, which means it works as an entitlement. Anyone who meets the eligibility rules is legally entitled to benefits, and federal funding adjusts automatically to match enrollment. Congress does not set an annual cap. When a recession pushes enrollment up, federal spending rises with it, no new legislation required.
The Congressional Budget Office projected an average monthly benefit of roughly $189 per participant for fiscal year 2026.2Congressional Budget Office. SNAP Baseline Projections January 2025 Benefit amounts are calculated from the Thrifty Food Plan, USDA’s estimate of what it costs to buy a nutritious low-cost diet, which was last reevaluated in 2021.3Food and Nutrition Service. Thrifty Food Plan, 2021
States and the Federal Government Split the Cost of Running the Program
Benefits are federal money, but the work of getting them out the door is done by state agencies. States take applications, interview households, verify income and assets, run local offices, handle appeals, and investigate fraud. Through fiscal year 2026, the federal government reimburses states for 50 percent of allowable administrative costs, and states pay the other half.4eCFR. 7 CFR 277.4 – Funding
What counts as an administrative cost is broad. It includes caseworker salaries, office rent and equipment, the automated eligibility and EBT systems, fair hearings when applicants challenge a denial or benefit cut,5eCFR. 7 CFR 273.15 – Fair Hearings and state-run fraud investigations coordinated with the USDA Office of Inspector General.
States also keep a slice of the money they recover when a household is overpaid. They retain 35 percent of collections in intentional fraud cases and 20 percent of other recovered overpayments, which helps offset collection costs.6Office of the Law Revision Counsel. 7 USC 2025 – Administrative Cost-Sharing and Quality Control They keep nothing when the overpayment was caused by the state’s own administrative error.
What Changes in 2027 and 2028
The One Big Beautiful Bill Act of 2025 made the most significant funding changes in the program’s history. Two provisions matter most.
Federal Administrative Share Drops to 25 Percent
Starting in fiscal year 2027, the federal share of administrative costs falls from 50 percent to 25 percent, and stays there permanently.7Food and Nutrition Service. SNAP Provisions of the One Big Beautiful Bill Act of 20256Office of the Law Revision Counsel. 7 USC 2025 – Administrative Cost-Sharing and Quality Control States will go from covering half of their administrative expenses to covering three-quarters.
Some States Will Pay Part of Benefit Costs
Beginning in fiscal year 2028, the 2025 law also requires states with high payment error rates to pay a share of the benefits themselves. The tiers work like this:
- Error rate below 6 percent: state owes nothing
- Error rate 6 to 8 percent: state pays 5 percent of benefit costs
- Error rate 8 to 10 percent: state pays 10 percent
- Error rate 10 percent or higher: state pays 15 percent, the maximum
For scale, the national payment error rate in fiscal year 2024 was 10.93 percent.8Food and Nutrition Service. USDA Releases Annual SNAP Payment Error Rates for FY 2024 On that year’s numbers, a large majority of states would face at least some benefit cost-sharing obligation once the new framework takes effect. The Congressional Budget Office has estimated that the overall SNAP changes in the 2025 law will reduce federal spending on the program by roughly $187 billion over the next decade.
Expanded Work Requirements
The same law raised the age ceiling for work requirements applying to adults without dependents from 54 to 64, and applied work requirements for the first time to parents whose children are older than 14. Tighter work rules tend to reduce enrollment, which lowers total federal benefit spending and may reduce state administrative caseloads over time.
Employment and Training, SNAP-Ed, and Disaster SNAP
Two smaller pieces of SNAP have their own funding rules. Employment and Training programs, which help participants build job skills, get a 100 percent federally funded grant with no state match, allocated mainly by each state’s share of work-registered SNAP participants with a $100,000 floor per state.9Food and Nutrition Service. SNAP Employment and Training Funding States can also draw additional federal funds at a 50 percent match for direct participant expenses like transportation, childcare, uniforms, and books.10eCFR. 7 CFR Part 273 Subpart C – Education and Employment If a mandatory participant’s out-of-pocket costs would exceed the state’s cap, the state has to exempt them.
SNAP-Ed, the nutrition education and obesity prevention component, is a separate federal grant with no state match, distributed by a formula that equally weighs each state’s 2009 share of national SNAP-Ed spending and its current share of national SNAP participation.11eCFR. 7 CFR 272.2 – Plan of Operation States must submit a SNAP-Ed plan for USDA approval by August 15 each year.
Disaster SNAP is a separate program from regular SNAP, activated only when an area has received a presidential major disaster declaration with individual assistance.12Federal Register. SNAP Disaster Supplemental Nutrition Assistance Program Its funding structure mirrors regular SNAP: the federal government pays 100 percent of the disaster benefits, and administrative costs share at the standard rate.
Quality Control Penalties
Long before the 2028 benefit cost-sharing kicks in, states already face federal penalties tied to their error rates. Every state has to run a quality control system that samples eligibility decisions for accuracy. An error rate of 6 percent or higher, or a failure to review at least 98 percent of the required sample, triggers a mandatory corrective action plan.13Food and Nutrition Service. SNAP Quality Control
When a state’s error rate exceeds the national average and meets additional statutory criteria, the USDA can assess a financial penalty. A liable state can pay the full amount or settle by investing 50 percent of the liability in activities addressing the root causes of its errors, with the other 50 percent held at risk; if the state is liable again in a third consecutive year, USDA collects the amount held back. These existing penalties will run alongside the new benefit cost-sharing formula starting in fiscal year 2028, so an above-6-percent error rate will soon trigger both a corrective action plan and a direct state contribution toward benefits.