States have major decisions to make in 2026 about the social safety net and taxes in the aftermath of a sweeping law President Donald Trump signed last year.
The federal government is shifting more responsibilities to states over the next few years, and states must prepare for greater costs in the Medicaid health care and SNAP food aid programs. They also must decide whether to offset upcoming federal funding cuts with state tax dollars. And they must weigh whether to cut state taxes on tips, overtime wages and other items to remain in line with Trump’s big bill.
Though most states still have ample rainy day funds, the extra burdens are coming as many states face their tightest budgets since the early days of the coronavirus pandemic.