Benefit phase-outs and cliffs in the U.S.

03 Sep, 2026

Phase-outs:

• SNAP (formerly/colloquially "food stamps"): People pay 30% of net income, so benefits are reduced by that amount (7 U.S.C. § 2017(a), CBPP).
• Housing Choice Vouchers: People pay 30% of adjusted monthly income, so benefits are reduced by that amount (24 CFR Part 982).
• Supplemental Security Income (SSI) (for aged/blind/disabled people, up to ~$1K/mo for individuals, ~$1.5K/mo for couples): Reduced dollar-for-dollar by non-excluded income (42 U.S.C. § 1382(b)(1)). On the margin, 50% of earned income is excluded (42 U.S.C. § 1382a(b)(4)). Some unearned income is excluded (20 CFR § 416.1124(c)(12)) but most isn't by default.
• TANF (state-run cash welfare, mostly for families with children): Earned income disregards are set per state. Example: Pennsylvania disregards 50%, i.e., benefits drop by the other 50% of income (55 Pa. Code § 183.94).

Cliffs (locally, infinite marginal tax rates):

• Medicaid: In most states, adults 19–64 not on Medicare are eligible up to 133% of the poverty level (42 CFR 435.119, Medicaid) + 5% "disregard" (42 CFR 435.603(d)(4)), about $22K/yr. (Aged/blind/disabled use other pathways, 42 CFR 435.603(j).)
• Affordable Care Act: Eligibility is capped at 400% of the poverty level, about $63K/yr for one person (this was looser and included smoothing 2021–2025, but that act expired after 2025) (CRS, KFF).
• SSI cuts off at $2K of assets for an individual, $3K for a couple (SSA, UKY fact sheet).
• LIHEAP (heating/cooling bill help): Eligibility is capped at the greater of 150% of the poverty level or 60% of state median income (42 U.S.C. § 8624(b)(2)(B), ACF).
• Childcare subsidies (CCDF): Eligibility is capped at 85% of state median income (45 CFR § 98.20(a)(2)(i)), though states may set lower ceilings.

Cascades:

• SNAP eligibility makes children "categorically eligible" for free school meals (7 CFR Part 245), which means schools enroll them automatically, without them submitting an application (FRAC). Without SNAP, many children would still qualify, but they'd need to apply.
• In 34 states plus DC¹, people eligible for SSI are automatically eligible for Medicaid (SSA). Some people who lose SSI eligibility might still be eligible for Medicaid if they applied separately.

Old government syntheses:

• A 2015 analysis from the Congressional Budget Office estimated that people with income below 450% the poverty level faced a marginal tax rate of 31%.
• A 2019 analysis of 2015 data from the Department of Health & Human Services broke things down more. They found that the median marginal tax rate was 51% among people with income 100–124% of the poverty level (the worst bracket), and that ~600K households with children and ~200K households without children faced a 100%+ marginal tax rate, where more earnings would reduce net resources.

Newer non-government syntheses:

• Roll et al. (2025) surveyed people under 250% of the poverty line. 22% reported taking at least one counterintuitive action to preserve eligibility, e.g., 8.4% didn't take a raise or promotion.
• Angell et al. (2025) modeled benefits cliffs from direct care workers in some states receiving raises and estimated ~36% effective marginal tax rate.