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State Variations in the Food Stamp Benefit Reduction Rate for Earnings: Cross-Program Effects from TANF and SSI Cash Assistance

by Kenneth Hanson and Margaret Andrews

Economic Information Bulletin No. (EIB-46) 36 pp, March 2009

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The Food Stamp Program reduces benefits to households as their earnings rise. This reduction is affected by household participation in other Government assistance programs (cross-program effects) and by the wide variation in State-specific reduction rates for earnings in Temporary Assistance for Needy Families (TANF). This study shows that, for food stamp recipients who also received cash benefits through TANF in 2005, an extra dollar of earnings led to a change in food stamp benefits ranging from a reduction of 36 cents to an increase of 9 cents. On average across all States, the overall reduction rate for food stamp benefits and TANF cash benefits was about 70 percent, or about double the benefit reduction rate for a household that received only food stamp benefits. Even with this high benefit reduction rate, households received larger net incomes by working and earning income. Cross-program effects and State-level variability in food stamp benefits are important considerations in integrating Government assistance programs into a support system for low-income households.

Keywords: Food Stamp Program benefit formula; Effective Benefit Reduction Rates; food stamp benefit effects from TANF earning deductions, effective tax rates

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Last updated: Sunday, June 03, 2012

For more information contact: Kenneth Hanson and Margaret Andrews

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