The money loaded onto an EBT card comes from tax revenue, but which government writes the check depends on what type of benefit is on the card. If you’re asking where does EBT money come from, the short answer is this: SNAP food benefits are paid entirely by the federal government out of general federal tax revenue, while cash assistance through the Temporary Assistance for Needy Families program is paid for jointly by a federal block grant and matching state funds. That division has held for decades, and it’s about to change.
SNAP Food Benefits Are 100 Percent Federal
Every dollar of SNAP benefits sitting on an EBT card today comes from the federal government. The funds originate as general tax revenue collected from individuals and businesses, then move through the U.S. Department of Agriculture’s Food and Nutrition Service to state agencies, which load the benefits electronically onto recipients’ cards. Federal spending on SNAP totaled roughly $110 billion in fiscal year 2025, with about 93 percent going straight to monthly benefits and the rest covering administration and nutrition education.
The legal basis sits in the Food and Nutrition Act of 2008, codified at 7 U.S.C. § 2011, which makes it federal policy to raise nutrition levels in low-income households by boosting their food purchasing power.1Office of the Law Revision Counsel. 7 USC Chapter 51 – Supplemental Nutrition Assistance Program States have never had to put their own tax dollars toward SNAP benefit amounts. That’s about to change, but for now, the food side of an EBT card is a purely federal expense.
SNAP dollars can only be spent on food for the household: fruits, vegetables, meat, dairy, bread, cereals, snack foods, non-alcoholic beverages, and seeds or plants that produce food. They can’t be used for alcohol, tobacco, vitamins, hot prepared food, pet food, or household supplies.2Food and Nutrition Service. What Can SNAP Buy?
TANF Cash Assistance Is Split Between Washington and the States
Cash benefits delivered through EBT follow a completely different funding model. The Temporary Assistance for Needy Families program pools federal and state money, and neither side pays the full bill.
On the federal side, the money arrives as a fixed block grant. Under 42 U.S.C. § 603, Congress appropriates $16.5 billion each year for state family assistance grants, a figure that hasn’t moved since TANF replaced the older welfare system in 1996.3Office of the Law Revision Counsel. 42 USC 603 – Grants to States Each state gets a set share of that total. Because the amount has never been indexed to inflation, its real purchasing power has fallen considerably over three decades.
In exchange, states have to spend their own money too. This is the Maintenance of Effort requirement. A state meeting federal work participation standards must spend at least 75 percent of what it historically spent on welfare programs; a state falling short of those standards must spend at least 80 percent. Miss the MOE and the federal government cuts the following year’s block grant dollar-for-dollar.4eCFR. 45 CFR Part 263 Subpart A – What Rules Apply to a States Maintenance of Effort? State MOE funds can be spent on cash assistance, child care, job training, and other services for low-income families.
One structural difference from SNAP matters here. TANF is explicitly not an entitlement. The statute says no individual or family has a right to assistance just because they meet the eligibility criteria.5Office of the Law Revision Counsel. 42 USC 601 – Purpose States have wide discretion in setting benefit levels, which is why monthly cash grants for a family of three range from roughly $250 to more than $1,100 depending on the state.
Federal law also caps TANF cash assistance at 60 months of federally funded aid over a person’s lifetime. After 60 cumulative months, the state can’t use its federal block grant to keep paying that person. States can exempt up to 20 percent of their caseload for hardship, and some use their own funds to continue benefits past the federal limit.6Office of the Law Revision Counsel. 42 USC 608 – Prohibitions; Requirements
Who Pays to Run the EBT System
The benefits themselves are one bucket of money. Running the system that delivers them is another. Card production, secure transaction processing, fraud investigation, staffing at local welfare offices, and the electronic networks connecting retailers to state agencies all cost money separately from the benefits loaded onto cards.
For SNAP, the cost-sharing arrangement is written into 7 U.S.C. § 2025. Through fiscal year 2026, the federal government pays 50 percent of state administrative costs, and state agencies submit administrative budgets to the Food and Nutrition Service by August 15 each year to draw down their matching funds.7SAM.gov. Assistance Listing State Administrative Matching Grants for the Supplemental Nutrition Assistance Program
Big Funding Changes Coming in 2027 and 2028
The One Big Beautiful Bill Act, signed into law in 2025, restructures SNAP funding in two significant ways.
First, the administrative cost split changes. Starting in fiscal year 2027, the federal share of SNAP administrative costs drops from 50 percent to 25 percent under 7 U.S.C. § 2025 as amended.8Office of the Law Revision Counsel. 7 USC 2025 – Administrative Cost-Sharing and Quality Control States will then need to cover 75 percent of the cost of operating SNAP locally.
Second, and more consequential, states will begin paying part of the actual food benefits for the first time. Starting in fiscal year 2028, each state’s share of benefit costs will depend on its payment error rate, which measures how often it issues benefits in the wrong amount or to ineligible recipients:
- Error rate below 6 percent: the federal government still pays 100 percent of benefit costs.
- Error rate between 6 and 8 percent: the state picks up 5 percent.
- Error rate between 8 and 10 percent: the state covers 10 percent.
- Error rate above 10 percent: the state covers 15 percent.
Well-run states pay nothing extra; states with high error rates take on a growing share. Combined with the administrative cost shift, this is the most significant restructuring of SNAP funding since the program began.
When Federal Funding Gets Disrupted
Because SNAP relies on annual federal appropriations, a government shutdown can put benefits at risk. During the October 2025 shutdown, SNAP funding was projected to run out within about a month. The USDA initially directed states to reduce November benefits before contingency reserve funds were used to keep payments whole. Those reserves, totaling roughly $5 billion to $6 billion at the time, had been set aside by earlier appropriations laws for exactly this kind of lapse.
The Farm Bill is the other periodic pressure point. Congress reauthorizes SNAP through the Farm Bill roughly every five years, and SNAP accounts for an estimated 80 percent of the bill’s total spending. The most recent full reauthorization was the Agriculture Improvement Act of 2018, extended through September 30, 2025, by the American Relief Act signed in December 2024.9Farm Service Agency. Farm Bill Home Congress has always acted before benefits were actually cut off, but the renewal cycle means SNAP funding is never truly permanent.
Stolen benefits are a separate matter. When SNAP benefits are taken through card skimming, cloning, or phishing, the Consolidated Appropriations Act of 2023 requires states to replace them using federal funds. A household can receive replacement benefits up to two times per federal fiscal year, capped at two months’ worth of the household’s normal allotment, and the theft generally must be reported to the state agency within 30 days of discovery.10Food and Nutrition Service. Replacement of SNAP Benefits in the Consolidated Appropriations Act of 2023
Natural disasters open another federal funding channel. When the president issues a disaster declaration for individual assistance, states can request approval to operate a Disaster SNAP program. D-SNAP provides temporary food benefits to households that wouldn’t normally qualify but have been affected by the disaster. The federal government pays for these emergency benefits in full, and states must submit a needs assessment documenting the disaster’s scope before the Food and Nutrition Service will approve the request.11Food and Nutrition Service. D-SNAP Policy Clarifications for Traditional and Virtual Operations