Now that it is signed, let there be no doubt that the ‘Big, Beautiful” tax bill, as Republicans labeled it, will have a marked negative impact upon low-income households and especially those who receive Supplemental Nutrition Assistance Program (SNAP) benefits. The same can be said for the tax bill’s impact upon the retail food industry as we all know that the vast majority of SNAP Electronic Benefit Transfer (EBT) dollars are spent at the nation’s supermarkets. The bottom line is that our retail food industry will have to contend with the $186 billion in SNAP budget cuts contained in the new tax bill. So, let us delve into important information you need to know about the pending SNAP cuts.
The bill President Trump signed into law also includes major cuts to other health care programs, too, such as Medicaid. However, when combining the new changes to these two programs (SNAP and Medicaid) alone, low-income households could easily lose more in benefits than they gain in tax breaks! A single parent who earns $20,000 a year, for example, might save about $750 in taxes but lose benefits worth more than $1,600. To justify the changes to SNAP, Agriculture Department Secretary Brooke Rollins said that the nearly 900-page Republican tax bill “tackles the fraud and waste that has run rampant in the SNAP program and holds states accountable for their error rates, strengthens work requirements, and prevents illegal aliens from receiving SNAP Program benefits.” However, all that aside, let there be no doubt that Democrats are still fuming about the SNAP and Medicaid changes and have recently warned Republicans that there will be strong repercussions at the negotiating table for pending issues like the upcoming farm bill negotiations. See my farm bill update at the end of this month’s commentary.
Impact On SNAP Recipients
The bottom line of the new tax law tightens the eligibility requirements for SNAP recipients as there is a new 80-hour monthly work requirement that is applicable to able-bodied adults under 65 years of age. This requirement excludes those individuals caring for children under the age of 14. Currently, work requirements apply to adults under 55. In addition, the new tax law requires some states to begin paying for some of the SNAP costs in fiscal 2028 that previously had been paid for by the federal government. The three-year delay to 2028 in payments to the fed from the states will give them time to prepare and budget for the future payments. However, many states are already warning that they may not be able to continue administering SNAP without cutting some essential state services, raising taxes or pulling funding from other vital state-run programs.
SNAP Users Today
More than 42 million people across the country receive SNAP benefits as of last March, the latest reporting period. As I reported in my commentary last month, this is down from a high of 47 million people in 2013. Also noteworthy is that White people make up 35 percent of SNAP participants, followed by Black participants at 26 percent, Hispanic at 15 percent, Asian at 4 percent, and Native Americans at less than 2 percent.
The House Agriculture Committee said that the Republicans’ budget tax bill’s impact on the 42 million Americans who use SNAP includes 16 million children, 8 million seniors, 4 million people with disabilities and more than 1 million veterans. Also, the new tax law slashes $1 billion from the Summer EBT feeding program which provides food assistance to children in low-income families over the summer months. The new SNAP requirements and policy changes will clearly put all of the 42 million SNAP recipients at risk of losing some or all of their SNAP benefits. It is not a pretty picture. But wait, there is more! Read on……
Damage To The Food Economy
I am all for increasing efficiencies in federal government programs but the SNAP cuts contained in the new tax bill are a bit dramatic in my opinion. Keep in mind that cuts to SNAP will also have significant negative impacts on the farmers who grow the food, manufacturers that package it, truckers who distribute it and chain and independently owned food stores. In 2024, SNAP created nearly 139,000 new jobs in support industries, including agriculture, manufacturing, transportation, and municipal services with direct wages totaling $9.8 billion. More than $20 billion in direct wages derived from the 388,700 grocery and support industry jobs supported by SNAP result in more than $4.5 billion in state and federal tax revenue per year. Not to confuse you, but all of this is in jeopardy.
Impact On Maryland
Because Best-Met, publishers of Food World and Food Trade News, is based in Maryland, I thought I would hone in on just a few stats as an example of the strain the new SNAP rules will create within the Free State. The independent political publication Maryland Matters highlighted the impact of the SNAP cuts in Maryland by recently stating that changes to SNAP will deliver “a devastating blow” to many of the 680,000 Marylanders who now get SNAP benefits. Maryland Matters also reported that the new tax bill included a “massive shift in costs from the federal to the state governments. Currently the governments split administrative costs for the SNAP program 50/50 and the federal government pays for all the costs of the actual benefit.” That is about to change.
“Beginning next year, states will pay 75 percent of administrative costs, at a price tag of $172.5 million, according to estimates from the Maryland Department of Human Services. A year later, they will pay for up to 15 percent of the actual benefits, according to a formula based on current performance. Maryland will pay a hefty price at a total cost in current dollars of $240 million.” It is also then axiomatic folks, that the less Maryland (and other states of course) distributes in SNAP benefits, the less the retail food industry handles at the front end.
“The Urban Institute estimated this month that about 369,000 Maryland families would lose some or all SNAP benefits. Of those, 81,000 would lose an average of $150 a month – the current average monthly benefit in Maryland is $180 – and 51,000 families with children would lose an average of $81 a month.” These are frightening numbers no matter what state you are operating in as low-income families are now barely scraping by.
SNAP Cuts’ Impact On Grocers
Politico News reported that the reconciliation mega bill will impact small, independent grocers very hard. Why? Simply because the majority of independent, small grocers serve their customers in remote locations and food deserts…. places that have limited options for fresh, healthy food, says Politico. Large chains will be impacted, too, but many have the resources to carry on. However, whether one is large or small, the impact on the SNAP cuts will surely be felt within the nation’s grocery industry.
Farm Bill Update
The tax bill held up a lot of other legislative initiatives on Capitol Hill but now that it has been signed by the president, House Ag Chairman G.T. Thompson (R-PA) has said he wants to move forward with other key ag priorities like the farm bill. As you should know by now, the farm bill expired in 2018 but has limped along with extensions since then. However, in the recently enacted tax bill, $67 billion was earmarked for farm bill programs, which means that some of the previously planned farm bill priorities were included in the new tax bill. Thus, Chairman Thompson said he now wants to move ahead with a smaller farm bill that contains a lot of bipartisan issues. He commented, “Unless (Democrats) purely want to play politics, there is no basis for partisanship with what we’re going to do in the farm bill with the remaining portion.” However, Democrats have already signaled they will not play ball! Oh well, I guess it is politics as usual. So, as the Congressional summer break moves along, don’t count on much to occur on the Hill until fall.
Barry Scher is associated with the public policy firm of Policy Solutions LLC and can be reached at [email protected].
