SNAP Cost Sharing for Counties: What the One Big Beautiful Bill Act Changes in FY2027 and FY2028

Updated April 2026 | By Dale Erling

Executive Summary (TL;DR)

The One Big Beautiful Bill Act (H.R. 1, P.L. 119-21), signed into law on July 4, 2025, is the most significant restructuring of SNAP funding in a generation. For county finance directors, there are two distinct cost shifts to track — and they hit in different years.

Administrative costs change first. Starting in FY2027, the federal government’s share of SNAP administrative costs drops from 50% to 25%, shifting the non-federal burden from 50% to 75%. That’s not a gradual phase-in — it’s a single, substantial step that takes effect on October 1, 2026. Counties in the 10 county-administered states will absorb a significant portion of that new non-federal share, depending on how their state allocates the cost.

Benefit costs follow in FY2028. For the first time in the program’s history, states will be required to pay a share of actual SNAP benefit costs — but only if their payment error rate exceeds 6%. The state share ranges from 5% to 15% depending on error rate thresholds. States under 6% pay nothing on benefits.

Bottom line: FY2025 and FY2026 are your planning window. The split hasn’t changed yet, but the clock is running. Counties that invest now in reducing administrative overhead and automating reconciliation will be in a materially better position when the new cost structure arrives.

1. Understanding the New Cost-Sharing Structure

What Changed — and When

Since SNAP was established, the federal government has covered approximately 50% of administrative costs, with states and counties splitting the other half. That structure remains intact through FY2026. Starting October 1, 2026 (FY2027), the rules change substantially.

Administrative Cost Split:

This is not a gradual increase. The federal match drops by 25 percentage points in a single fiscal year. How that 75% non-federal share is divided between a state and its counties depends entirely on state law and state budget decisions. According to the National Association of Counties (NACo), in 9 of the 10 county-administered states, counties will have to contribute more to administrative costs — or fully cover the administrative cost shift.

The New Benefit Cost-Sharing Layer (FY2028)

This is the provision that most planning guides are missing entirely. Beginning in FY2028, states may also be required to fund a share of actual SNAP benefit payments — not just administrative costs — based on their payment error rate from prior years. The ASTHO One Big Beautiful Bill Act summary outlines the formula:

For FY2028 specifically, states may choose to use either their FY2025 or FY2026 error rate as their baseline. Starting in FY2029, the cost share will be calculated using the error rate from three years prior — meaning the error rates your state posts in 2025 and 2026 are not just performance metrics. They are financial liability calculations.

As detailed by Ballotpedia’s OBBBA implementation tracker, eight states had FY2024 error rates below 6% and would face no benefit cost-sharing obligation if those rates hold: South Dakota (3.28%), Idaho (3.59%), Wisconsin (4.47%), Wyoming (5.12%), Vermont (5.13%), Nebraska (5.5%), Utah (5.74%), and Nevada (5.94%).

2. Step-by-Step Calculation: Estimating Your County’s Impact

Administrative Cost Exposure (Effective FY2027)

Use this framework to project your county’s budget impact from the administrative cost shift:

Step 1 — Determine Gross Administrative Cost (GAC) Include staffing, IT infrastructure, eligibility systems, and overhead. This is your total cost of administering the program before any federal reimbursement.

Step 2 — Calculate current reimbursement vs. future reimbursement Through FY2026, multiply GAC by 0.50 to find the federal share. Your county and state cover the other 50%. Starting FY2027, multiply GAC by 0.25. Your county and state now cover 75%.

Step 3 — Calculate the funding gap Subtract the FY2027 federal share from the FY2026 federal share. That difference — 25% of your GAC — is the new non-federal obligation that needs a funding source before October 1, 2026.

Step 4 — Determine county vs. state responsibility In county-administered states, your state will decide how the new 75% non-federal share is split. Contact your state SNAP agency now if you haven’t already. Allocation decisions will likely be made during state budget cycles well before FY2027 arrives, and your input matters during that process.

Step 5 — Factor in transactional overhead Manual payment processing and reconciliation costs are non-reimbursable — they sit entirely in the county general fund and don’t factor into the federal match calculation at all. Every hour of manual administrative work is a pure county cost. Automated government payment platforms reduce this overhead, which lowers your total GAC and lowers the dollar amount of your share at any percentage level.

Step 6 — Model the benefit cost-share risk for FY2028 Pull your state’s current payment error rate. If it’s above 6%, model the additional cost of the state paying 5–15% of benefit costs beginning FY2028. While benefit liability falls at the state level, states routinely pass costs downstream — so even if your county doesn’t hold direct liability, the state’s exposure can create budget pressure that flows to counties. The Feeding America OBBBA FAQ provides a useful breakdown of how the error-rate tiers translate to real dollar impacts across different state sizes.

3. Strategic Recommendations for Budget Protection

Start planning now, not in FY2027. The funding gap hits all at once when the new fiscal year begins. Finance directors who treat this as a distant problem will be scrambling for emergency appropriations. Those who plan ahead will have options — including engaging state budget processes, reallocating existing administrative resources, and reducing overhead through technology.

Automate reconciliation where you can. Every manual hour spent reconciling SNAP administrative fees is a non-reimbursable cost that sits entirely in the county general fund. Counties that have modernized their payment reconciliation processes report reducing close-out hours by 50% or more. Under the new 75% non-federal share structure, that kind of overhead reduction has a larger dollar impact than it did under the old 50/50 split.

Audit your IT infrastructure. Federal reimbursement is increasingly tied to modern, secure, and accessible payment systems. Under the executive push toward digital-first government payments, counties that can demonstrate a lower GAC through efficient platforms keep more of their administrative budget intact. A County in the Cloud payment model that consolidates platforms and eliminates siloed systems directly reduces the labor overhead that inflates GAC.

Track your state’s payment error rate closely. For the first time, error rates carry direct financial consequences — not just for federal audits, but for actual dollar obligations starting in FY2028. If your state is hovering near the 6%, 8%, or 10% thresholds, small improvements or deteriorations in accuracy could mean significant budget swings. This is a reason to advocate with your state agency for stronger error-rate reduction programs now, while FY2025 and FY2026 rates are still being established.

Implement digital-first outreach. Reducing paper-based enrollment significantly lowers the GAC. There is no longer a 50% federal backstop absorbing half of your administrative overhead — you own 75% of that cost starting in FY2027. Moving constituents to digital payment and enrollment channels is one of the most effective ways to reduce costs before the change takes effect.

Engage your state SNAP agency immediately. Allocation decisions between state and county governments haven’t been finalized everywhere. Your input during the state budget process is more valuable right now than it will be once allocations are locked in. If you’d like to discuss how technology choices can influence your county’s GAC ahead of that conversation, our government payment specialists are available to help model the impact.

FAQ

Q: Has anything changed for SNAP administrative costs yet in 2025 or 2026?

A: No. The administrative cost split remains 50% federal / 50% non-federal through the end of FY2026. The change to 25% federal / 75% non-federal takes effect at the start of FY2027 — October 1, 2026. FY2025 and FY2026 are your planning window, not your crisis window.

Q: What legislation governs these changes?

A: The One Big Beautiful Bill Act (H.R. 1, P.L. 119-21), signed by President Trump on July 4, 2025. It reduces federal SNAP funding through FY2034 and represents the largest structural change to the program in its history. The USDA Food and Nutrition Service maintains an active implementation page with ongoing policy memos and guidance.

Q: What is the new federal match rate for SNAP administrative costs starting in FY2027?

A: 25%. This is down from the historical rate of 50%. The non-federal share — split between states and counties depending on state law — increases to 75%.

Q: How do counties calculate SNAP administrative cost-sharing under the new rules?

A: Take your total Gross Administrative Cost (staff, IT, and overhead) and multiply by 0.75 to find the new non-federal obligation beginning in FY2027. Then apply your state’s county/state allocation to determine what portion falls on your county specifically.

Q: When does benefit cost-sharing begin, and how does it work?

A: Benefit cost-sharing begins in FY2028. States with payment error rates above 6% must pay 5%, 10%, or 15% of SNAP benefit costs depending on whether their error rate exceeds 6%, 8%, or 10% respectively. States with error rates below 6% pay nothing. The baseline for FY2028 will be either the FY2025 or FY2026 error rate — whichever the state chooses.

Q: Can technology reduce the cost of SNAP administration for counties?

A: Yes, and the impact is larger than it used to be. Automating payment and reconciliation reduces administrative overhead, which lowers your total GAC. Under the new 75% non-federal share structure, every dollar you remove from your GAC through efficiency has a greater budget impact than it did at the old 50/50 split. Explore how IntelliPay’s government payment platform supports counties facing this shift.

This article is provided for general informational and planning purposes only and does not constitute legal, financial, accounting, or regulatory advice. Readers should not rely on this content as a substitute for guidance from their agency counsel, auditors, or other qualified advisors, and should consult federal and state SNAP program administrators, official USDA FNS guidance, and applicable statutes and regulations before making budget, staffing, or policy decisions. All examples and projections are illustrative only and may not reflect your jurisdiction’s actual allocations, cost-sharing arrangements, or implementation timeline. Program requirements, cost-sharing formulas, and error-rate methodologies are subject to change through legislation, regulation, and agency guidance without notice.

Sources: USDA Food and Nutrition Service — One Big Beautiful Bill Act | National Association of Counties (NACo) | ASTHO OBBBA Law Summary | Ballotpedia SNAP OBBBA Implementation | Feeding America OBBBA FAQ, December 2025