The federal policy landscape has changed significantly and permanently. The passage of H.R. 1, the One Big Beautiful Bill Act (HR1), signed July 4, 2025, represents the most consequential restructuring of federal support for children and families in decades. Across Medicaid, food assistance, early childhood, child welfare, and tax policy, the rules have changed. And as implementation moves forward, one thing is clear: more decision-making power is shifting to states, along with greater financial responsibility.
For state child advocates, this is a defining moment. What happens in state capitals over the next 12 to 24 months will determine real outcomes for children and families. This piece is intended to give you a clear picture of what has changed, who is most affected, and where state advocacy can make a difference.
7 Things State Advocates Should Know
- Medicaid is undergoing its largest restructuring in history. Approximately $1 trillion in cuts over 10 years, new work requirements, and more frequent eligibility reviews are projected to leave millions without coverage. (CBO)
- SNAP’s funding structure has fundamentally changed. For the first time in the program’s history, states will be required to pay a share of food benefit costs, and most will face hundreds of millions in new annual expenses.
- Federal investment in early childhood is failing to keep pace, meaning less support for families and more pressure on states. Congress passed modest FY2026 increases for Head Start and CCDBG, but neither keeps pace with inflation, and administrative capacity has been significantly reduced at the federal level.
- The burden falls hardest on working families, those who earn too much to qualify for the full safety net, but too little to absorb rising costs. The families most impacted are what researchers call the ALICE population: employed, but one disruption away from crisis.
- States now hold more authority than at any point in recent history, and more financial responsibility. The decisions made at the state level in 2026 and 2027 will determine whether families have access to health coverage, whether food assistance is available, and whether early childhood programs continue.
- Implementation is already underway. States are making key decisions now, from early enforcement of Medicaid work requirements to SNAP error rate management, and critical deadlines are approaching quickly
- The advocacy is working. More damaging proposals were beaten back. State-level innovation is accelerating. This is not a moment for despair; it is a moment for strategic, sustained action.
What Has Changed: Five Policy Areas
Health Coverage: Medicaid & CHIP
The cuts to Medicaid in HR1 are the largest in the program’s history. Key facts:
- HR1 cuts federal Medicaid funding by approximately $1 trillion over 10 years. (CBO)
- An estimated 11.8 million people are projected to lose coverage through HR1’s Medicaid and CHIP provisions, with an additional 5.1 million at risk from ACA marketplace changes — totaling roughly 17 million more uninsured Americans by 2034. (CBO)
- New work and community engagement requirements take effect January 1, 2027, requiring adults ages 19 to 64 in Medicaid expansion to document 80 hours of qualifying activity per month. States may request delays through 2028.
- HHS must issue implementation guidance by June 1, 2026, leaving states limited time to build the systems and staffing needed to comply.
- Beginning January 2027, states must conduct eligibility redeterminations for Medicaid expansion adults every six months rather than annually, increasing administrative burden on both families and state agencies.
- Several states are already moving to implement work requirements ahead of the federal deadline, signaling the pace at which this landscape is shifting. (KFF)
There’s one important counterweight: HR1 included the Rural Health Transformation Program, providing $50 billion nationally through 2030 to shore up rural health infrastructure. How states access and deploy those funds is one of the most significant decisions ahead.
Food Assistance: SNAP
HR1 made the largest cuts in SNAP’s history, totaling $187 billion over ten years. But the structural shift may matter more than the dollar figure:
- For the first time, states will pay a share of SNAP benefit costs — 5 to 15 percent based on payment error rates, beginning in FY2028
- States’ share of administrative costs rises from 50 to 75 percent beginning October 2026
- States will spend a median of 202 percent more on SNAP in their budgets once provisions are fully phased in; in 15 states, the increase exceeds 300 percent (Georgetown Law Center on Poverty and Inequality)
- Fewer than 10 states had error rates below 6 percent in FY2024, meaning most face significant new financial obligations (USDA)
- Some states are already showing SNAP caseload declines of 10 percent or more, a warning signal that changes are affecting families before benefit cost-sharing even begins (CBPP)
Because cost-sharing will be calculated based on FY2025 and FY2026 error rates, states have little runway to reduce exposure before their obligations are set.
Early Childhood Education: Head Start & CCDBG
After flat funding in FY2025, Congress passed modest FY2026 increases: $170 million for Head Start and $85 million for CCDBG, which is a win for advocates, given that the administration’s budget request proposed level funding for both. Those increases matter, but:
- Neither keeps pace with inflation; CCDBG’s increase falls more than $160 million short of what is needed to maintain purchasing power. (CLASP)
- Combined with FY2025 stagnation, the compounding effect is a real-dollar reduction in program capacity.
- In 2025, the Office of Head Start closed 5 of its 10 regional offices and terminated approximately 100 central office staff, reducing the technical assistance capacity grantees depend on.
- As of late 2025, 135 Head Start programs serving 65,000 children were at risk of closing due to funding disruptions.
Two programs targeted for elimination in the president’s budget, the Preschool Development Grant Birth-Through-Five and Child Care Access Means Parents in School, survived and were funded in the FY2026 appropriations package. That is a meaningful advocacy gain. But the landscape remains volatile.
Child Welfare: Title IV-E
Full-year FY2026 child welfare funding was maintained in the Consolidated Appropriations Act enacted February 3, 2026, a relative win in a difficult fiscal environment. Family First implementation continues, though implementation remains highly variable across states.
The risk here is indirect but real. When families lose food assistance and health coverage, family stress increases, and child welfare systems absorb that pressure. Cuts made upstream always show up downstream. Advocates working in child welfare should be tracking Medicaid and SNAP changes as upstream threats to the children and families they serve.
Tax Policy: Child Tax Credit
The 2017 Tax Cuts and Jobs Act (TCJA) expanded the Child Tax Credit to $2,000 per child, but those provisions were set to expire at the end of 2025, which would have cut the credit back to $1,000. HR1 prevented that rollback, making the credit permanent at $2,200 per child with inflation indexing beginning in 2026.
That stabilization matters. But the structural problem remains:
- Today’s credit lifts 4.1 million people, including 2.4 million children, above the poverty line (CBPP, 2026)
- 19 million children (more than 1 in 4) are excluded from the full credit because their families earn too little — including 45 percent of Black children, 39 percent of Latino children, 60 percent of children with a female single parent, and 35 percent of children in rural areas (Columbia Center on Poverty and Social Policy, 2025)
- By comparison, the 2021 expanded Child Tax Credit temporarily lifted 5.3 million people out of poverty in a single year; the distance between 5.3 million and 2.4 million is the policy stakes
- HR1 also added a new Social Security number requirement for the taxpaying parent, narrowing eligibility for mixed-status immigrant families
Seventeen states now have their own child tax credits, with Georgia implementing one in 2026, evidence that state-level innovation is filling a gap that federal policy has left.
Who Bears the Weight: Working Families on the Brink
The federal changes don’t affect everyone equally. The families feeling this most acutely are the ALICE population: Asset Limited, Income Constrained, Employed. These households earn too much to qualify for the deepest safety net, but not enough to absorb rising costs or new administrative barriers without serious consequences.
These families often receive SNAP, Medicaid, child care assistance, and energy assistance simultaneously. When one system adds new hurdles, it ripples through all the others:
- Losing child care can mean losing a job.
- Losing a job can mean losing health coverage.
- Losing health coverage can mean a medical crisis that ends in debt, or worse.
Administrative burden is itself a cost. Approximately 70 percent of Medicaid disenrollments during the post-pandemic unwinding were procedural. Families lost coverage due to paperwork, not because they were ineligible (MACPAC, KFF). The same dynamic is likely to play out with work reporting requirements in both Medicaid and SNAP. The requirement is not the barrier. The reporting is.
The numbers tell a clear story. Based on Congressional Budget Office estimates, by 2034, the top 10 percent of earners are projected to see incomes rise by 2.7 percent from HR1’s tax cuts, while the bottom 10 percent will see incomes fall by 3.1 percent, driven primarily by cuts to Medicaid and food assistance (CBO, August 2025).
The Central Challenge: More Power to States, More Financial Responsibility Too
Based on the impending federal policy changes, the reality now before state policymakers and advocates is clear: the decisions made at the state level in the months ahead will determine real outcomes for real children.
States now hold more authority over children’s health coverage, food assistance, and early childhood systems than at any point in recent history. They also hold more financial responsibility than they have ever been asked to carry. This is not simply a shift in policy. It is a fundamental restructuring of who is accountable for children’s well-being in America.
That shift creates both risk and opportunity. For state advocates, the statehouse has never mattered more; federal advocacy remains essential, but many of the decisions that will determine outcomes for children are being made right now, at the state level.
A Note of Grounded Hope
Advocates have already made a difference in shaping this landscape. More damaging proposals were beaten back, and programs that were cut have been restored through sustained organizing and persistent engagement. The work ahead at the state level will determine what these federal changes ultimately mean for children and families. State advocates have proven they can move policy – and that work has never mattered more.
States are already showing what’s possible. For a deeper look at recent state-level wins, read our roundup here.
Key Dates and Decisions to Watch
Data sources: Congressional Budget Office (CBO); Center on Budget and Policy Priorities (CBPP); Georgetown University Center for Children and Families (Georgetown CCF); KFF; Center for Law and Social Policy (CLASP); Food Research & Action Center (FRAC); First Five Years Fund; Bipartisan Policy Center; Columbia Center on Poverty and Social Policy; MACPAC — 2025–2026.