New SNAP Error Rate Reveals Why North Carolina Cannot Afford to Limit Revenue

Starting October 2027, North Carolina could be responsible for paying $140 million in SNAP benefit costs, according to newly released U.S. Department of Agriculture data. Nearly 1.3 million North Carolinians will be counting on the state to fully cover those costs so they can continue putting food on the table. 

The need for food assistance will not simply disappear because North Carolina cannot afford to sustain it. If state lawmakers fail to raise the revenue needed to cover these new costs, eligible families in need could lose access to food assistance and go hungry.

For the first time, the future of food assistance in North Carolina could depend on the state’s ability to raise enough revenue to pay for it.

H.R. 1 is shifting SNAP benefit costs onto North Carolina 

The harmful federal megabill passed in 2025, H.R. 1, makes sweeping cuts to SNAP that will increase costs for North Carolina and make it harder for families in need to access food assistance. Historically, the federal government has covered 100 percent of SNAP benefit costs, the actual dollars families use to buy food. 

Beginning in October 2027, H.R. 1 requires states to pay a share of those costs based on their SNAP payment error rate. Under H.R. 1, North Carolina could be required to pay 5 percent to 15 percent of its SNAP benefit costs, depending on its FY2025 and FY2026 payment error rates.  

What does the error rate mean for the state budget? 

The USDA reported North Carolina’s FY2025 payment error rate at 7.36 percent, meaning the state could face about $140 million in new costs in FY2028 if the FY2026 error rate is not reduced below 6 percent. 

The SNAP payment error rate measures the share of SNAP benefit dollars issued incorrectly due to overpayments and underpayments, which are primarily caused by unintentional administrative mistakes, not fraud. However, the measure only captures whether benefits were issued incorrectly in active cases. It does not measure what is actually important: whether eligible families are facing delays, wrongful denials, benefit terminations, or other barriers to getting food assistance.  

For the first time, North Carolina will need to budget SNAP benefit costs that the federal government has historically covered. And these costs are not temporary. H.R. 1 shifts an ongoing share of SNAP benefit costs onto states, which will create long-term budget pressures as North Carolina lawmakers continue to pursue tax cuts and new limits on future revenue.

Counties are warning they cannot sustain these costs 

H.R. 1 increases county SNAP administrative costs and workload 

Counties are being asked to do more with less. Starting October 2026, H.R. 1 will raise counties’ share of SNAP administrative costs from 50 percent to 75 percent. In the first year alone, North Carolina counties collectively could face $191 million in total SNAP administrative costs, which include an estimated $69 million in new costs.  

These estimates do not capture the additional resources counties will likely need to implement H.R. 1’s new work reporting rules, eligibility criteria, and verification steps. Counties also face growing pressure to reduce payment errors that shape future SNAP benefit costs. Together, these changes likely require more investment in staffing, training, and administrative capacity. 

Counties are already making difficult tradeoffs to sustain SNAP administration 

Early budget proposals for FY2026-2027 reveal that counties, especially smaller rural counties, are facing immense budgetary and administrative pressures due to H.R. 1. Counties are responding by: 

• Raising taxes: Beaufort County’s manager recommended a property tax rate increase “directly due to H.R. 1,” while Lee County’s manager attributed part of a proposed tax increase to the same costs. 

• Eliminating staff positions: Cumberland County proposed cutting 61 open Department of Social Service positions to help offset the new administrative costs. 

• Cutting funding from other social service programs: Orange County proposed cutting funding for county day care and reducing temporary employee hours to absorb new costs. 

These tradeoffs could undermine counties’ ability to manage an increasingly complex program while ensuring eligible families can reliably access SNAP when they need it most. 

County leaders are also concerned that state lawmakers could shift future SNAP benefit costs onto counties, adding to the administrative costs they already face. Cumberland County is planning for potential impacts, projecting that its SNAP benefit cost share could be up to $30 million next fiscal year. 

And these are not costs counties would face just once. If SNAP benefit costs are shifted to counties, they could be responsible for significant new costs year after year.  

Limiting revenue means limiting North Carolina’s ability to fight hunger in increasingly unaffordable times 

North Carolina and its counties are preparing to take on new ongoing SNAP costs at the same time many families are facing rising grocery prices, cutting back on groceries, and struggling to make ends meet. 

The New SNAP Costs Headed to North Carolina

	SNAP Admin Cost Shift	SNAP Benefit Cost Shift
Who pays?	Counties (unless the state assumes costs)	State
When does it begin?	Oct. 2026	Oct. 2027
Estimated New Costs, FY 2027	$69 million1Represents the combined new administrative costs across all 100 counties. (Estimates from Michael Leigh, Impact of H.R. 1 on SNAP in North Carolina & Implementation Update, NC Department of Health and Human Services, January 13, 2026, https://webservices.ncleg.gov/ViewDocSiteFile/104981.) (Oct. 2026 – June 2027)
Estimated New Costs, FY 2028	$83 million2Estimate assumes a 50 percent county share of SNAP administrative costs and that SNAP participation and administrative costs remain at FY2026 levels. (Calculated by NC Budget & Tax Center based on estimates from NCDHHS, 2026-2027 Budget Estimates by County, https://www.ncdhhs.gov/divisions/social-services/county-staff-information/budget-information/budget-estimates/2026-2027-budget-estimates-county.) (July 2027 – June 2028)	$140 million3Based on North Carolina’s 7.36 payment error rate in FY2025 and the assumption that the state does not reduce its FY2026 payment error rate to below 6 percent. The cost shift estimate is based on the first six months of FY2026 SNAP benefit and participation data. (Estimates from “States’ First-Ever Bill for SNAP Benefits Could Cost Billions,” Center on Budget and Policy Priorities, June 24, 2026, https://www.cbpp.org/blog/states-first-ever-bill-for-snap-benefits-could-cost-billions.)    (Oct. 2027 – June 2028)

As wages fail to keep pace with the rising cost of living, food assistance remains a critical safeguard against hunger. Without greater investment in making housing, child care, and other basic needs more affordable, North Carolinians will continue to need SNAP to help them put food on the table. 

Despite these realities, state lawmakers are advancing constitutional limits on state and local revenue that would make it harder to fairly raise the funds that are needed to sustain SNAP and other public services that help families get by.  

North Carolina cannot take on new SNAP costs and continue meeting residents’ needs while at the same time limiting its ability to raise the revenue needed to pay for them. 

An income tax cap would limit the state’s ability to protect SNAP  

Any family could face job loss, reduced work hours, or an emergency that makes putting food on the table difficult. Yet lawmakers are asking voters to permanently limit the state’s ability to raise the revenue needed to provide food assistance in the future by capping the income tax rate at 3.5 percent. 

It would also lock in the income tax cut already scheduled for next year, reducing state revenue by an estimated $1 billion in FY2027.  

If the proposed income tax cap goes into effect, North Carolina will face a huge barrier to raising enough revenue to guarantee that families in need can afford groceries — not just 10 years from now but even next year. The income tax cap would lock in tax cuts that primarily benefit the wealthy instead of preserving North Carolina’s ability to ensure everyday families don’t go hungry during tough times.  

A property tax levy limit would make it harder for counties to deliver SNAP  

The proposed property tax levy limit would restrict how much revenue local governments can raise in property taxes each year, even as costs rise and policymakers in Raleigh and Washington place additional responsibilities on municipalities and counties to meet residents’ needs. 

In his budget proposal, Ashe County Manager Adam Stumb warned that the levy limit would “upend Ashe County’s ability to provide local services.” The proposed limit would make it even harder to take on H.R. 1 cost shifts.  

For example, Tyrrell County, which already struggles to provide a baseline of services under existing budget constraints, faces new SNAP administrative costs this next fiscal year. Under a levy limit, the county stands to lose over $1 million in revenue each year. 

If a levy limit leaves counties without the resources needed to reduce payment errors, it would make it harder for North Carolina to avoid future SNAP benefit costs and for eligible families to get the food assistance they need.

North Carolinians need better tax policy, not more of the same 

H.R. 1 is shifting new SNAP costs onto North Carolina and its counties. And the reality is that more than a decade of income tax cuts for the wealthy and profitable corporations has meant there are already too few tools to prepare and respond. 

Locking in a tax agenda that has hollowed out our ability to care for our communities and keep everyday costs affordable would only make life harder for North Carolinians. Yet that is what some state lawmakers have supported by placing constitutional limits on tax choices on the ballot this November.  

To meet the state’s new SNAP obligations and reduce the need for food assistance, North Carolina lawmakers should be pursuing proven tax policies that can adequately fund programs and services that work to reduce hunger and hardship.  

They should start with a fairer tax code in which the wealthy few and profitable corporations pay their fair share, rather than limiting tax options in ways that could leave middle-, low-, and fixed-income North Carolinians paying more in taxes and fees.

Doing so would show that state leaders understand both the affordability challenges families face and the essential role tax policy plays in building a North Carolina where all families can afford to live and get ahead.