States face pivotal 2026 decisions on Medicaid, SNAP, and taxes as broad welfare and tax changes shift cost and responsibility from Washington to state capitals, with potential new expenses.

The CBO projects Medicaid reforms could cut spending by about $911 billion through 2034 and leave roughly 10 million more people uninsured, prompting some states to consider tighter eligibility or lower reimbursements, while rural hospitals could lose funding unless mitigated by a $50 billion five-year plan.

Under the new law, work requirements for certain adults on Medicaid will require states to budget for compliance, tech upgrades, and frequent eligibility reviews, with Nebraska aiming to begin in May and other states facing multi‑million dollar setup costs.

States will decide whether to conform to federal tax cuts in their own tax codes, as the rule suspends tips and overtime taxes, creates new deductions, and offers corporate breaks; Michigan has already opted in, with Arizona and others weighing conforming.

Partisan dynamics shape conforming decisions, with New Jersey weighing the Medicaid funding impact and prioritizing access to benefits, while Arizona and similar states evaluate conforming to federal tax cuts to ease living costs.

Beyond Medicaid and SNAP, states must determine conforming to federal tax changes on tips and overtime, with Michigan on board and several legislatures planning to conform or partially conform as they reconvene in January 2026.

Overall, states face imminent budget pressures across health care, nutrition assistance, and tax policy as they implement or respond to the federal changes, with uneven effects by state.

Important timelines include legislatures meeting and budgeting in January 2026, SNAP cost shifts starting October 1, and Medicaid work requirements slated to take effect in January 2027.

States are weighing how to fund SNAP changes and potential benefits reductions, with New Jersey warning of multi‑year Medicaid funding cuts and the challenge of maintaining services amid reduced federal support.

Debates over boosting SNAP funding persist even as federal cuts loom, with New Jersey citing a potential $36 billion Medicaid reduction over a decade and emphasizing protection of essential services.