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Adds a new paragraph (17) to 42 U.S.C. 409(a) establishing a penalty that allows the Secretary to reduce a State's grant under section 403(a)(1) for the immediately succeeding fiscal year by up to 5 percent of the State family assistance grant if the State failed to comply with section 404(b) for a fiscal year.
Amends 42 U.S.C. 609(a)(7)(B)(i)(I)(dd) by striking the existing provision and inserting new language (inserted text not included in this section).
Amends subsection (b) of 42 U.S.C. 604 by modifying paragraph (1) (striking and inserting unspecified text) and by inserting unspecified text into paragraph (2) before the period.
Tightens how states can use Temporary Assistance for Needy Families (TANF) funds and changes the cap on how much of a state’s spending can be administrative costs. It also creates a new penalty: if a state violates the 404(b) spending rules, the federal government can cut up to 5% of the state’s next-year TANF block grant.
These changes aim to steer more money to direct services and benefits rather than overhead. The updates take effect October 1, 2026.
Referred to the House Committee on Ways and Means.
Introduced March 24, 2025 by Rudy Yakym · Last progress March 24, 2025