TANF Eligibility Tightens: New Bill Caps Assistance at 200% Poverty Line Starting 2026

This bill, the "Targeting TANF to Families in Need Act," introduces a significant change to who qualifies for Temporary Assistance for Needy Families (TANF). Starting October 1, 2026, states using federal TANF grants must limit that cash assistance to families whose income falls below 200% of the federal poverty guidelines. The stated goal is to concentrate these funds on families facing the most severe financial hardship.

Drawing a New Line

The core change here is the introduction of a hard income cap. Currently, states have more flexibility in setting income limits for TANF cash assistance. This bill mandates a uniform ceiling: if a family's income is twice the federal poverty level or more, they won't be eligible for TANF cash help funded by this grant, even if they previously qualified under their state's rules. For context, 200% of the poverty line varies by family size, but it represents a threshold significantly above deep poverty, yet potentially below what's needed for stability in many areas.

Focusing Funds, Feeling the Squeeze

The practical effect is twofold. On one side, the legislation aims to ensure that limited federal dollars are directed towards those with the lowest incomes. The idea is to prioritize the neediest households. On the other side, families earning just above this new 200% threshold, who might currently receive TANF to bridge income gaps or manage temporary setbacks, would lose access to this specific funding stream come October 2026. This could create a benefits cliff, where a small pay increase pushes a family over the limit, resulting in a net loss of resources. While the 2026 effective date provides some runway, states and families currently relying on broader eligibility will need to prepare for this adjustment.