SNAP Waste Hits $10.1 Billion as Iowa Junk Food Ban Blocked

The national Supplemental Nutrition Assistance Program (SNAP) error rate reached 10.62 percent for Fiscal Year 2025, resulting in $10.1 billion in improper payments. The U.S. Department of Agriculture (USDA) says this massive waste highlights a severe lack of state accountability, even as a federal judge recently blocked Iowa and four other states from banning junk food purchases with SNAP benefits.

$10.1 Billion in Improper SNAP Payments

The FY 2025 error rate far exceeds the 6 percent threshold set by Congress. While this represents a modest decrease from FY 2024, the USDA says the current rate proves states are still mismanaging taxpayer dollars.

"Including both overpayments and underpayments, this year's rate represents a collective $10.1 billion in improper payments nationwide,"

the USDA stated on June 24. The payment error rate measures how accurately states calculate SNAP eligibility and the benefit amounts that recipients receive.

How the One Big Beautiful Bill Act Cracks Down on Waste

The One Big Beautiful Bill Act, signed into law by President Donald Trump last year, created the State Quality Control Incentive provision. This provision establishes real financial consequences for states that mismanage SNAP funds.

Under the new rules, states with an error rate between 6 percent and 8 percent must fund 5 percent of the benefits. The penalty scales up for worse performance. States with error rates of 10 percent or more must fund 15 percent of benefits. These financial consequences could take effect as soon as Oct. 1, 2027.

States with error rates exceeding 6 percent are also required to submit a Corrective Action Plan to the USDA Food and Nutrition Service. The plan must explain how the state intends to address the root causes of its high error rates.

"These payment error rates are further proof that state accountability is severely lacking in SNAP,"

Agriculture Secretary Brooke Rollins said.

"USDA has taken historic action to help interested states curb SNAP waste, and I hope other states, regardless of political leadership, prioritize needy families and the American taxpayer over politics."

States Push to Fix Administrative Errors

A June report from the American Public Human Services Association surveyed all 50 state SNAP agencies between May 19 and June 5. The survey aimed to understand how agencies plan to improve payment accuracy.

Out of the 39 states that responded, 92 percent said they had already completed a root cause analysis or had one underway. The report noted that payment errors stem from both participant and administrative factors, with errors roughly evenly distributed between the two.

Many states are now increasing their workforce, expanding training, adopting new technologies, and strengthening quality assurance functions to identify and avoid errors.

Senate Committee on Agriculture, Nutrition, and Forestry Chairman Sen. John Boozman (R-Ark.) said efforts must be taken to ensure SNAP is administered in a fair, accurate, and responsible manner.

"It is clear that improvements were needed to ensure SNAP is administered as intended to support those truly in need while protecting taxpayer dollars,"

Boozman said.

"I applaud the states that are implementing innovative solutions to decrease error rates and be good stewards of federal funds. The reforms included in the Working Families Tax Cuts were designed to promote accountability for significant mismanagement."

The Working Families Tax Cuts refer to the One Big Beautiful Bill Act.

Federal Judge Blocks Iowa SNAP Junk Food Ban

While states struggle with payment accuracy, federal officials and state leaders are also pushing to ensure SNAP benefits are used for nutritious food. Beginning this fall, SNAP-authorized retailers must stock more nutritious items across four food categories: produce, protein, dairy, and grains.

Almost a dozen states plan to ban beneficiaries from buying energy drinks, candy, and soda using SNAP benefits over the coming months. Iowa, along with Colorado, West Virginia, Tennessee, and Nebraska, previously received USDA approval to impose these common-sense restrictions.

However, a federal judge blocked the USDA on June 22 from restricting SNAP beneficiaries in these five states from buying sugary foods or drinks. The judge ruled that the department lacked the authority to approve these food restriction waivers.

A USDA spokesperson defended the department's actions and pushed back on the ruling.

"The idea that taxpayer funds should not be used to purchase junk food should not be controversial,"

the spokesperson said.

What is the current SNAP payment error rate?

The national SNAP payment error rate reached 10.62 percent for Fiscal Year 2025. This rate measures how accurately states calculate eligibility and benefit amounts, and it far exceeds the 6 percent threshold set by Congress.

How will the One Big Beautiful Bill Act penalize states for SNAP errors?

The One Big Beautiful Bill Act requires states with SNAP error rates between 6 percent and 8 percent to fund 5 percent of the program benefits. States with error rates of 10 percent or higher must fund 15 percent of the benefits. The penalties could take effect as soon as Oct. 1, 2027.

Why was Iowa's SNAP junk food ban blocked?

A federal judge blocked Iowa and four other states from banning the purchase of sugary foods and drinks with SNAP benefits. The judge ruled that the USDA lacked the statutory authority to approve the food restriction waivers, despite the USDA arguing that taxpayer funds should not buy junk food.