The Food-Stamp Loophole the USDA Says Costs — $10 Billion a Year.

The U.S. Department of Agriculture, led by Secretary Brooke Rollins (R), is moving to close a decades-old administrative loophole that lets states hand out food stamps to households well above the program’s federal income and asset limits. Supporters of the change say it would save taxpayers more than $10 billion a year.

The loophole has a bland bureaucratic name — broad-based categorical eligibility, or BBCE. The mechanics are simple: a state hands a household a token benefit from a welfare-adjacent program (in some cases nothing more than a brochure or a referral phone number), and that paperwork waives the federal gross-income test and asset test that would otherwise disqualify the family from the Supplemental Nutrition Assistance Program.

This page lays out what the loophole actually is, where the $10 billion figure comes from and how solid it is, the crucial difference between an “improper payment” and criminal fraud, and the political geography of the fight — including which states are cooperating with the USDA’s data audit and which are not. The goal is precision: what the rule would do, what the numbers can and cannot support, and where the policy claim outruns the evidence.

• $10B+/year — the annual savings supporters claim from closing the BBCE loophole — the figure at the center of the June 2026 Hill op-ed and Republican estimates · Source: The Hill
• 5.9 million — people estimated to be enrolled in SNAP through BBCE despite exceeding the program's federal income or asset limits, per a Foundation for Government Accountability estimate cited in the op-ed · Source: The Hill
• 10.93% — SNAP combined payment-error rate for FY2024 (9.26% over-issuance, 1.67% under-issuance) — errors, not necessarily fraud · Source: USDA FNS
• 41.7 million — average monthly SNAP participants in FY2024, on roughly $99.8 billion in federal spending · Source: USDA Economic Research Service
• 40+ states + DC — jurisdictions that use broad-based categorical eligibility to expand SNAP access beyond the baseline federal limits · Source: USDA FNS
• Rule, not a law — BBCE was created by administrative rule and can be narrowed by administrative rule — the same lever a 2019 USDA proposal tried and the Biden administration withdrew in 2021 · Source: Federal Register

SNAP has federal eligibility rules: in most cases a household must earn under 130 percent of the poverty line (the gross-income test) and hold limited countable assets (the asset test). Broad-based categorical eligibility lets a state sidestep both. Because anyone “categorically” receiving certain Temporary Assistance for Needy Families (TANF) benefits is automatically eligible for SNAP, states learned they could confer SNAP eligibility simply by making nearly every household technically a TANF “recipient” — often through a low-cost service like an informational pamphlet or a 1-800 referral line funded with TANF dollars.

The USDA’s Food and Nutrition Service confirms the basic mechanism on its own program page: BBCE lets states raise gross-income limits and ease or eliminate the asset test for SNAP applicants. More than 40 states and the District of Columbia use it. Defenders call it a streamlining tool that helps working families, seniors, and people with modest savings; critics call it a way for states to draw down more federal SNAP dollars by writing their own eligibility rules over the top of Congress’s.

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The headline number traces to the June 2026 Hill op-ed and to a Foundation for Government Accountability estimate it cites: roughly 5.9 millionpeople are on SNAP through BBCE even though their income or assets exceed the federal limits, at a cost the group puts near $11 billion in annual benefits. Close the loophole, the argument goes, and the federal government stops paying benefits to households Congress never intended to cover — an annual saving north of $10 billion.

That figure deserves a careful caveat. When the first Trump administration tried to narrow BBCE by rule in 2019, the USDA’s own published estimate in the Federal Register was more modest: a net federal saving of about $9.4 billion over fiveyears — on the order of $2 billion a year, affecting roughly 1.7 million households. The $10-billion-a-year framing rests on the broader outside estimate of who is enrolled through the loophole, not on the smaller official scoring of the specific 2019 rule. Both numbers are real; they measure different things, and an honest reader should hold both in view.

The distinction matters because the two are routinely blurred. The USDA’s Food and Nutrition Service reported a combined SNAP payment-error rate of 10.93 percentfor FY2024 — 9.26 percent over-issuance and 1.67 percent under-issuance. For FY2023, the agency estimated about 11.7 percent of benefits, roughly $10.5 billion of $90.1 billion in outlays, were improper. The Government Accountability Office tracks the same problem in its report on USDA’s SNAP oversight, GAO-24-107461.

But an improper paymentis a payment made in the wrong amount, to the wrong person, or without adequate documentation. Most of it is administrative error — a caseworker miscalculating income, a missing pay stub — not theft. Criminal fraud (EBT card skimming, trafficking benefits for cash, identity fraud) is a subset, and a serious one: the USDA’s Inspector General has testified that some SNAP-fraud proceeds reached actors linked to transnational crime. The honest framing is that the loophole, the error rate, and outright fraud are three separate buckets that overlap at the edges — not one undifferentiated $10 billion of stolen money.

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BBCE is administered by states, and the politics of the loophole break along familiar lines. At a June 25, 2026 hearing of the House Oversight subcommittee on government efficiency, chaired by Rep. Tim Burchett (R-TN), lawmakers reported that 29 states had complied with the USDA’s request to share SNAP data for an audit — overwhelmingly Republican-run states — while the states that declined were overwhelmingly run by Democrats. California (Gov. Gavin Newsom, D), among the largest SNAP states, was reported to have refused the data request.

From the cooperating states’ data, the USDA and committee members cited roughly $3 billion in potential waste and fraud — including benefits flowing to about 186,000 deceased people and 442,000 applications tied to fraudulent Social Security numbers — and extrapolated a nationwide figure exceeding $10 billion. One caution: Secretary Rollins’s widely shared claim that 14,000 SNAP recipients in a single state drove luxury vehicles was examined by Snopes, which found the underlying data anonymized and the vehicle-ownership link unverified. The loophole is documented; some of the more dramatic individual claims around it are not yet.

“The T in SNAP integrity is taxpayers. We will not keep paying benefits to people who do not qualify under the law Congress wrote.”

USDA Secretary Brooke Rollins (R), paraphrasing her public framing of the rule

One reason BBCE is politically delicate: SNAP enrollment is a fast track into the National School Lunch Program. A child whose household receives SNAP is automatically certified for free or reduced-price meals. Closing the loophole, critics warn, could knock some children off automatic certification. The Hill op-ed pushes back with its own math, estimating that about 99.9 percent of children currently on the school-lunch program would still qualify and that barely 2,900 students nationwide would be removed — because most low-income children qualify through other routes regardless of BBCE.

Opponents see the stakes very differently. The Center on Budget and Policy Priorities argues BBCE chiefly helps working families just over the income line, older adults, and people who have saved modestly for emergencies — the asset test, they note, can penalize a household for keeping a few thousand dollars in the bank. The Food Research & Action Center estimates that ending BBCE would push close to 6 million people off SNAP and warns it would increase hunger among families and children. The same rule, in other words, is described by one side as cutting waste and by the other as cutting food — and the average monthly benefit it touches is about $187.20 per person.

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The food-stamp loophole is real, legal, and decades old: broad-based categorical eligibility lets states pay SNAP benefits to households above the federal income and asset limits, and more than 40 states use it. The USDA under Secretary Brooke Rollins (R)is moving to narrow it by rule, the same lever a 2019 proposal pulled before the Biden administration withdrew it in 2021. The $10-billion-a-year savings claim rests on an outside estimate of who is enrolled through the loophole; the USDA’s own 2019 scoring of a similar rule was closer to $2 billion a year. The improper-payment rate is a genuine 10.93 percent, but most of that is error, not theft. And the fight now runs through a state-by-state data audit that splits cleanly along party lines. We will track the proposed rule when it formally publishes in the Federal Register, and the comment fight that follows.

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