SNAP's $10 Billion Error Problem Shows Why Congress Reformed the Program

The Supplemental Nutrition Assistance Program (SNAP) continues to lose billions of taxpayer dollars to improper payments despite years of reform efforts. According to the U.S. Department of Agriculture (USDA), SNAP made $10.1 billion in improper payments during fiscal year 2025, representing 10.6 percent of all benefits distributed. More than $8.8 billion resulted from overpayments, meaning recipients received more assistance than program rules permitted.

The latest figures also underscore why Congress included new accountability measures in H.R. 1, the "Working Families Tax Cuts." Beginning in fiscal year 2028, states with SNAP payment error rates above 6 percent will be required to share a portion of the benefit costs they administer. The reform addresses one of SNAP's longstanding weaknesses by giving states a direct financial stake in reducing payment errors.

A Program with Misaligned Incentives

The FY 2025 report marks the fourth consecutive year that SNAP's improper payment rate has exceeded 10 percent. Although the error rate declined slightly from the previous year, it remains nearly three times higher than its historic low in FY 2013.

The reason these payment errors have proven so difficult to reduce is structural. States administer SNAP, determine eligibility, and distribute benefits, but federal taxpayers finance more than 90 percent of the program's costs. When states bear little financial responsibility for improper payments, the incentive to invest in stronger verification systems, administrative oversight, and fraud prevention is reduced.

The Center for a Free Economy has previously examined these structural weaknesses in SNAP Should Feed Families, Not Waste Taxpayer Dollars and Food Stamp Waste Shows Why SNAP Reform Is Needed, arguing that stronger accountability is essential to protecting taxpayers while ensuring benefits reach eligible households.

Early Signs the Reforms Are Influencing State Behavior

Although the new cost-sharing requirements will not take effect until fiscal year 2028, states are already preparing for them.

Several states have begun investing in upgraded eligibility systems, stronger verification procedures, expanded quality control reviews, and improved fraud detection technologies. Virginia has strengthened its eligibility verification process and expanded quality assurance efforts. Louisiana has increased case reviews while automating wage verification. Mississippi is modernizing decades-old eligibility software, Arkansas is deploying artificial intelligence tools to reduce administrative errors, and Minnesota has committed significant funding to modernize its benefit administration systems.

These investments demonstrate that accountability changes behavior. When states have greater financial responsibility for program performance, they have stronger incentives to improve program administration and reduce improper payments.

Congress Should Preserve and Strengthen the Reforms

The reforms are not perfect. A temporary Alaska carveout included in H.R. 1 allows several states with the highest payment error rates to delay financial penalties, reducing the immediate incentive for those jurisdictions to improve performance. Even so, the broader accountability provisions represent meaningful progress toward aligning responsibility with results.

Some lawmakers have proposed delaying the cost-sharing requirements during Farm Bill negotiations. Congress should reject those efforts. The FY 2025 report shows that SNAP continues to experience unacceptably high payment error rates, and the prospect of greater financial responsibility is already encouraging states to strengthen oversight and modernize their systems.

A decline of just 0.3 percentage points from the previous year does not represent a meaningful improvement in program integrity. Billions of taxpayer dollars continue to be distributed improperly each year, reinforcing the need for stronger incentives and better program administration.

CFE Takeaway

The latest USDA report confirms that SNAP's payment error problem is rooted in the program's incentive structure, not simply isolated administrative mistakes. H.R. 1, the "Working Families Tax Cuts," began addressing that problem by giving states a greater financial stake in reducing improper payments, and the early response suggests those incentives are already encouraging stronger oversight and better administration. Congress should preserve those reforms, resist efforts to delay them, and continue strengthening accountability so SNAP serves eligible families while safeguarding taxpayer dollars.