Trumps 'beautiful' new law means states have big decisions this year on Medicaid, SNAP and taxes

States have major decisions to make in 2026 about the social safety net and taxes in the aftermath of a sweeping law President Donald Trump signed last year.The federal government is shifting more responsibilities to states over the next few years, and states must prepare for greater costs in the Medicaid health care and SNAP food aid programs.

They also must decide whether to offset upcoming federal funding cuts with state tax dollars.And they must weigh whether to cut state taxes on tips, overtime wages and other items to remain in line with Trump's big bill.

Though most states still have ample rainy day funds, the extra burdens are coming as many states face their tightest budgets since the early days of the coronavirus pandemic.“There’s a big storm coming for state budgets — the radar is clear — and it’s going to hit almost every state,” said Tim Storey, CEO of the National Conference of State Legislatures.“It’s going to mean some hard choices.”In most states, those determinations will begin in January, when legislatures convene and governors lay out their agendas.

The Supplemental Nutrition Assistance Program, which is used by 42 million Americans to help buy groceries, is going to become more expensive for states to run and harder for some people to qualify for assistance.Currently, the federal government picks up the full cost of benefits — around $94 billion in the fiscal year that ended in September 2024 — and splits the administrative costs with the states, which run the program.The federal share of administrative costs for 2024 was about $6 billion.Starting Oct.

1, states will have to pay three-fourths of the cost to run the program.And starting in late 2027, some states that make errors in more than 6% of payments — often for paying a household more than it's supposed to get after its income rises — will have to start paying some of the costs of benefits.

California already has allocated $84 million to try to reduce SNAP er...