4 Million Americans Lost Food Stamps After the New Tax Law - and Medicaid Cuts Have Not Started Yet

SNAP Enrollment Down 4 Million Since the Law Passed

Enrollment in the Supplemental Nutrition Assistance Program, commonly known as food stamps, has dropped by more than 4 million people since the One Big Beautiful Bill Act was signed into law on July 4, 2025. That represents approximately 10 percent of total SNAP participation, according to analysis by the Center on Budget and Policy Priorities cited in a CBS News retrospective on the law’s first year.

The decline reflects new eligibility restrictions built into the legislation, including expanded work requirements for able-bodied adults without dependents and tighter documentation standards for income verification. In Arizona alone, state data cited by Diversity News showed that food stamp participation had dropped by nearly half - a loss of approximately 500,000 people, including about 200,000 children - since the law took effect.

What the Law Changed for Food Assistance

The OBBBA did not eliminate SNAP. It tightened who qualifies and under what conditions. The law expanded work requirements to apply to a broader age range of recipients, required more frequent income verification for some categories of recipients, and adjusted how certain income and asset thresholds are calculated.

The stated intent of the provisions was to limit what the law’s supporters called “welfare dependency” and to redirect program spending toward recipients deemed more work-ready. Critics, including food bank networks and anti-hunger organizations, argued the requirements would cause eligible recipients to lose benefits through administrative complexity rather than because their circumstances had changed. The 4 million enrollment drop suggests those barriers are real, regardless of the underlying intent.

The Medicaid Provision That Hasn’t Arrived Yet

SNAP cuts represent one of the law’s most immediate household-level consequences. But the provision with the largest projected impact is not yet active. The OBBBA introduced new Medicaid work requirements that are scheduled to take effect in 2027.

The Urban Institute has projected that those requirements could reduce Medicaid enrollment by between 5 million and 10 million people. The structure mirrors the SNAP changes - recipients must document work, education, or community service participation to maintain coverage - but applies to a health insurance program serving roughly 90 million Americans. States are currently preparing implementation plans.

Electric Vehicle Credits Also Ended

Beyond food and health coverage, the law made other changes that are showing up in household behavior. The federal tax credit for electric vehicle purchases was eliminated as part of the bill’s tax offset provisions. Cox Automotive reported EV sales falling 22 percent in 2026 compared with the prior year - the largest annual decline on record - as buyers who had planned to use the credit reconsidered their purchases.

Several home energy efficiency credits were also eliminated or reduced, including those for rooftop solar installation and home insulation upgrades. The changes reduce the practical cost savings available to homeowners who had been planning energy improvement projects with the assumption that federal incentives would remain in place.

Who Benefited and What the Data Shows

The law did deliver measurable tax relief for millions of households. Approximately 28 million workers claimed the new overtime income deduction, with an average deduction of about $3,100. About 7 million workers claimed the tip income deduction at an average of $7,000. Around 34 million seniors claimed the $6,000 bonus deduction for taxpayers over 65, subject to income limits.

The Tax Policy Center estimated that the average household would see a tax reduction of approximately $2,900 in 2026 from the legislation. The distribution of those benefits skews upward: roughly $6 of every $10 in tax reductions under the law flows to households earning $217,000 or more annually. For households that lost SNAP benefits or are facing Medicaid eligibility changes in 2027, the tax cut may be offset by the cost of replacing food or health coverage they were previously receiving.

References: CBS News | CBS News