Targeting TANF: Federal Welfare Funds Restricted to Families Below 2x Poverty Line Starting in 2026

The “Targeting TANF to Families in Need Act” is a short but significant piece of legislation aimed squarely at how states distribute Temporary Assistance for Needy Families (TANF) funds. Essentially, this bill puts a hard income cap on who can receive federal TANF grants, specifically those funds allocated under Section 403(a)(1) of the Social Security Act. The main takeaway is this: States will only be allowed to use this specific federal money to assist families whose income is less than twice the federal poverty guidelines.

The New Math for Welfare

For those of us juggling bills, the federal poverty guidelines are the benchmark used to determine eligibility for many programs. This bill uses a clear, fixed metric: two times the federal poverty line (2x FPL). If a family’s income is at or above that threshold, states cannot use these particular federal funds to help them. This is a direct move to ensure that federal welfare dollars are strictly focused on the lowest-income populations, addressing concerns that some states were using these funds for families whose need wasn't as critical.

For example, if the federal poverty line for a family of four is currently around $30,000, this bill would effectively cut off eligibility for these funds once that family earns $60,000 or more. The bill is clear that this targeting mechanism relies on the official poverty guidelines published regularly in the Federal Register, keeping the criteria objective and consistent across states.

The Eligibility Crunch and the Deadline

While the intent is to funnel aid to the most vulnerable, this change has two major real-world impacts. First, families who are currently receiving some form of TANF assistance but whose income is slightly above the 2x FPL mark may find themselves ineligible for continued aid once this provision kicks in. These are often working families who are still struggling but technically earn too much for the new federal definition of 'needy.' State agencies will have to adjust their programs, which could mean a disruption for families relying on that assistance to afford childcare or transportation to work.

Second, states have a long runway to prepare. This requirement for stricter income targeting doesn't take effect until October 1, 2026. This delay gives state agencies time to overhaul their eligibility systems and figure out how they will cover or adjust programs that previously served families above the new income cutoff using this specific federal money. However, it also means that the intended benefit of tighter targeting is several years away, leaving the current system in place for the immediate future.