Which state budgets or legislation in 2025–2026 could alter safety-net benefits for low-income residents?
Executive summary
State budgets and 2025–26 legislation are primed to change safety-net access mainly through shifts in Medicaid, SNAP, and state tax/benefit programs as states respond to major federal moves such as H.R. 1/OBBBA and reconciliation proposals that would shift costs to states and cut or reshape federal funding [1] [2]. Specific state actions already visible include California’s phased schedule for CalFresh/CFAP expansions and automation funding moves [3], Pennsylvania’s new state earned-income tax credit in its 2025 budget [4], and widespread concern from policy groups that congressional reconciliation language could force states to cut Medicaid and SNAP benefits [5] [6].
1. Federal blows or buffers: H.R. 1/OBBBA sets the frame states must react to
The One Big Beautiful Bill Act (H.R. 1 / OBBBA) and related 2025 reconciliation activity rewrote federal–state fiscal dynamics around tax rules, Medicaid, and SNAP, creating pressure points that will force many states to reconsider benefit generosity or eligibility if federal funding is capped or cost-shifted [1] [2]. Analysts and state officials are already using special subcommittees to track these changes — for example New Mexico’s Federal Funding Stabilization Subcommittee — because the law reshapes revenues and mandates for programs that matter most to low‑income residents [1].
2. Medicaid: potential reversals, work requirements and cost‑shifts that hit states and enrollees
Multiple reports flag reconciliation and budget proposals that would reduce federal Medicaid funding (through per‑capita caps, matching‑rate changes or new cost‑sharing) and that could require states to reduce optional benefits, lower provider payments, or restrict eligibility to balance budgets — outcomes that would directly affect low‑income adults, children, rural residents and dually eligible Medicare/Medicaid beneficiaries [7] [5] [8]. Grantmakers In Health notes that changes such as per‑capita caps could lower federal Medicaid dollars by hundreds of billions over a decade, forcing tradeoffs at the state level [7].
3. SNAP: shifting costs to states could produce benefit cuts or enrollment barriers
CBO and budget analysts cited by CBPP warn that proposals to make states pay 5–25% of SNAP benefit costs would almost certainly prompt states to reduce benefits or tighten eligibility, and CBO estimates states could cut or terminate benefits for about 1.3 million people in an average month under some cost‑shift scenarios [6] [9]. MultiState and Pew flag SNAP as one of three policy areas reshaped by federal changes and therefore highly likely to be altered through state budget maneuvers [2] [1].
4. State budget choices shifting benefits — examples from California, Pennsylvania, Texas and New York
States are already making discrete choices: California’s budget documents show delays and phased funding for CalFresh/CFAP automation and a $15 million General Fund benefit allocation for 2025‑26, with expansions for certain noncitizen seniors pushed into later years because of budget timing [3]. Pennsylvania’s 2025 budget created a Working Pennsylvanians Tax Credit tied to the federal EITC — an expansion of state‑level income support [4]. Advocacy groups point to states like Texas where Medicaid expansion remains an unresolved budget choice that would extend coverage to 1.5 million low‑income Texans at roughly 90% federal match but carry a multiyear state cost [10]. New York’s 2025 budget shows selective boosts to child care and energy affordability programs but also leaves some proposals pared back in final negotiations [11].
5. Who stands to gain or lose — and the racial, rural and disability equity angles
Analysts warn that cuts or rollback of federal supports would disproportionately harm people of color, rural communities, children, and people with disabilities: undoing SNAP or Medicaid gains would reduce benefits for millions and widen disparities, while rural hospitals and uninsured adults in non‑expansion states face heightened risk if federal Medicaid support is reduced [9] [8] [5]. CBPP and related analyses show how program retrenchment maps onto existing inequities and program dependence [9] [12].
6. Political tradeoffs and timing: why states may delay, borrow or target changes
Experts expect most states will avoid emergency special sessions and instead use normal budget cycles to adapt — but they will still face tough tradeoffs between raising taxes, cutting other services, or trimming benefits [2]. Where states choose targeted measures — for instance California’s pilot targeting older or disabled CalFresh households — the changes can be framed as administrative or technical while producing substantive shifts in who gets help and when [3] [2].
7. What reporting does not (yet) show and limits on current evidence
Available sources document federal bills, budget projections, and several state budget examples, but they do not provide a comprehensive, state‑by‑state list of enacted 2025–26 laws that will change safety‑net benefits; statewide implementation details and final legislative texts for many states are not included in the current reporting (not found in current reporting). Moreover, precise fiscal offsets or waiver approvals that would lock in program changes are described in general terms rather than as enumerated, final actions in every state [1] [7].
Bottom line: the largest levers that could change safety‑net benefits for low‑income residents in 2025–26 are federal reconciliation and appropriations choices that shift costs to states (pressuring Medicaid and SNAP), plus a mix of state budget decisions that range from targeted tax credits (Pennsylvania) to phased expansions or delays (California) and unresolved debates such as Medicaid expansion in Texas [1] [4] [3] [10].