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Federalism-related policies in the 2025 budget reconciliation bill (One Big Beautiful Bill Act)
This page provides an overview of provisions included in the 2025 budget reconciliation bill that are related to federalism.
The One Big Beautiful Bill Act was a federal budget reconciliation bill signed into law by President Donald Trump on July 4, 2025, addressing tax policy, border security and immigration, defense, energy production, the debt limit, and adjustments to SNAP and Medicaid. The Senate passed the bill in a 51-50 vote on July 1, with Vice President J.D. Vance (R) casting the tie-breaking vote in favor of the bill. It cleared the United States House of Representatives on July 3, 2025, in a 218-214 vote.[1][2]
- States must cover a larger share of program costs—SNAP administrative funding drops from 50% to 25%, and states with high error rates must begin sharing 15–25% of SNAP benefit costs.
- Medicaid changes eliminate federal bonus funding for expansion states and require mandatory work requirements and 6-month eligibility checks, increasing administrative burdens.
- States receive a $10 billion border fund and a separate $2.575 billion grant package for planning, surveillance, and event security. States have broad discretion, but the law does not authorize immigration enforcement powers.
- A new DOJ BIDEN Fund reimburses states for immigration-related enforcement, detention, and prosecution, limited to actions under existing state authority.
- The bill rescinds billions in previously appropriated environmental grants, including funding for climate justice block grants, greenhouse gas reduction, and low-carbon transportation. This removes federal support from state-implemented environmental planning and infrastructure equity programs.
- A new Workforce Pell Grant program ties federal student aid to state-certified job training programs. Governors must approve programs as aligned with in-demand jobs, linking federal aid to state labor market priorities and performance benchmarks.
- States and counties receive 25% each of federal revenue from solar and wind projects on public lands, expanding fiscal compensation under existing land-use revenue rules and reinforcing fiscal federalism in renewable energy development.
What is Federalism?
What is budget reconciliation?
Dive deeper:
This article contains the following sections:
- Detailed breakdown of federalism-related provisions in the 2025 budget bill: This section summarizes key provisions in the 2025 budget reconciliation bill that affect the balance of federal, state, and local authority.
- Supplemental Nutrition Assistance Program (SNAP) adjustments: Outlines proposed changes to SNAP that could affect state administrative responsibilities and household eligibility.
- Medicaid program changes: Details modifications to Medicaid eligibility and enrollment policies that impact state healthcare budgets and implementation duties.
- Homeland security and border assistance: Reviews new federal grants for state and local governments to support border infrastructure, surveillance, and major event security operations.
- Immigration-related state and local reimbursement: Describes a new federal fund that reimburses states and localities for law enforcement and judicial activities involving noncitizens.
- Environmental and climate grant program rescissions: Identifies grant program repeals and rescissions that reduce federal funding for state-run environmental and energy initiatives.
- Education policy changes: Summarizes provisions that restructure student aid and introduce state-certified eligibility for new Workforce Pell Grants.
- Renewable energy revenue sharing: Explains new revenue-sharing provisions directing a portion of federal wind and solar energy proceeds to states and counties.
- How does budget reconciliation work?: This section explains the budget reconciliation process, what can and cannot be included in a budget bill, and the status of the 2025 budget reconciliation bill.
- Text of reconciliation bills and drafts: This section contains the full text of the relevant committee drafts and the full budget reconciliation bills.
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| •Key terms • Court cases •Major arguments • State responses to federal mandates • Federalism by the numbers • Index of articles about federalism |
TheOne Big Beautiful Bill Act (H.R.1) includes several provisions that would significantly reshape the balance of power and responsibilities between the federal government and individual states, influencing state budgets, policy choices, and public services.
Supplemental Nutrition Assistance Program (SNAP) adjustments
The One Big Beautiful Bill Act includes major nutrition policy changes that shift financial and administrative responsibilities to states, restrict federal agency discretion, and impose new conditions on state implementation—marking a significant exercise of congressional control over federal-state program design.[2]
- Shifts greater responsibility to states by reducing the federal match for SNAP administrative costs from 50% to 25% starting in FY2027 (Section 10106).
- Establishes a performance-based state cost-share formula for SNAP benefits tied to payment error rates, increasing state financial exposure beginning in FY2028 (Section 10105).
- Limits USDA discretion by codifying the 2021 Thrifty Food Plan as the permanent baseline for SNAP benefits and prohibiting cost increases in future reevaluations (Section 10101).
- Expands and standardizes SNAP work requirements for able-bodied adults, limiting state flexibility to waive rules except under narrow exemptions for noncontiguous states until 2028 (Section 10102).
- Removes federal funding for the SNAP education and obesity prevention grant program after FY2025, reducing federal involvement in state-level nutrition education (Section 10107).
- Tightens noncitizen eligibility rules under SNAP, narrowing federal eligibility definitions and limiting states' ability to provide benefits to broader categories of immigrants (Section 10108).
- Rescinds prior federal funding for forestry programs, eliminating resources previously appropriated for state wildfire mitigation and forest resilience (Section 10201).
Medicaid program changes
- See also: Medicaid work requirements in the states
This budget reconciliation bill made significant changes to the Medicaid program, affecting state budgets, eligibility enforcement, and program administration by shifting more responsibility to states and narrowing federal flexibility.[2]
- Delays two major CMS rules on eligibility and enrollment until 2034, preserving state control over enrollment procedures (Sections 71101–71102).
- Requires states to implement cross-state Social Security number matching and quarterly death database checks to verify eligibility (Sections 71103–71104).
- Increases eligibility redeterminations to every six months for certain Medicaid enrollees (Section 71107).
- Limits federal funding for emergency care for undocumented immigrants by reducing the FMAP to the standard state rate (Section 71110).
- Eliminates the 5% FMAP bonus for new Medicaid expansion states, reducing incentives to expand coverage (Section 71114).
- Restricts states' use of provider taxes and directed payments, curbing state flexibility in Medicaid financing (Sections 71115–71117).
- Requires CMS to certify that state Medicaid waivers do not increase federal costs, adding new federal oversight of state policy innovations (Section 71118).
- Mandates 80-hour monthly work requirements for expansion adults, with no option for state waivers (Section 71119).
- Requires states to impose cost-sharing on enrollees above 100% of the poverty level, capped at $35 per service and 5% of income annually (Section 71120).
Homeland security and border assistance
This section appropriates billions in new federal homeland security funding, with significant allocations flowing through state-administered grants. While most activities remain federally controlled, the law expands state and local discretion over how security funds are used—particularly for border-related infrastructure and operations—while reaffirming federal authority over immigration enforcement.[2]
- Appropriates $2.575 billion for homeland security grants to support state and local planning, surveillance, and event-specific security needs, including unmanned aircraft detection and large-scale international events such as the 2026 FIFA World Cup and 2028 Olympics (Section 90005(a)(1)).
- Exempts funds for the FIFA World Cup and Olympics from certain Homeland Security Act restrictions on grant use, allowing more flexible local deployment of resources (Section 90005(a)(2)).
- Establishes a new State Border Security Reinforcement Fund with $10 billion in long-term funding to support state and local governments’ border-related projects, including fencing, surveillance, and relocation logistics, at their discretion (Section 90005(b)(1)–(3)).
- Allows states to receive grants for completed, ongoing, or future activities dating back to January 20, 2021, including for wall construction, detection of illegal substances, and relocation of noncitizens (Section 90005(b)(4)).
- Requires states to submit applications describing intended use and fund allocation; the Department of Homeland Security retains approval authority but grants wide leeway to states in how funds are used within defined categories (Section 90005(b)(5)).
- Clarifies that the law does not authorize states or localities to exercise federal immigration enforcement powers, preserving the primacy of federal law under the Immigration and Nationality Act and Homeland Security Act (Section 90005(b)(6)).
This section creates a federal reimbursement fund for state and local governments addressing immigration-related criminal activity, reinforcing a model of cooperative federalism tied to law enforcement and judicial support.[2]
- Establishes the BIDEN (Bridging Immigration-related Deficits Experienced Nationwide) Reimbursement Fund within the Department of Justice to provide grants to states, state agencies, and local governments for enforcement, detention, and prosecution activities involving noncitizens (Section 100055(a)–(b)).
- Allows funding for completed, ongoing, or new activities dating back to January 20, 2021, including locating and transporting certain noncitizens, supporting court operations, and prosecuting trafficking offenses (Section 100055(b), (d)).
- Clarifies that subnational governments may only act under existing state or local legal authority, preserving the federal government's exclusive role in immigration enforcement (Section 100055(b)).
Environmental and climate grant program rescissions
HR 1 eliminates or rescinds funding for a wide range of environmental programs, many of which were administered through federal-state partnerships. These changes reduce federal financial support for state-led environmental initiatives and rescind block grants and implementation funding that gave states discretion over climate and infrastructure policies.[2]
- Rescinds funding for the Environmental and Climate Justice Block Grants, ending a federal program that distributed flexible funds to states and localities for environmental equity initiatives (Section 60016).
- Repeals the Greenhouse Gas Reduction Fund, a federal financing mechanism that supported state and local efforts to reduce emissions through public-private partnerships (Section 60002).
- Rescinds unobligated funds for greenhouse gas implementation grants, reducing state and local resources for developing and enforcing Clean Air Act compliance plans (Section 60013).
- Eliminates funding for the Neighborhood Access and Equity Grant Program, which provided federal transportation grants to states and municipalities to address infrastructure inequities (Section 60019).
- Cancels funding for environmental review implementation grants and low-carbon materials transportation programs, limiting resources for state departments of transportation to integrate environmental standards into project planning (Sections 60023–60024).
- Rescinds funds for the Methane Emissions and Waste Reduction Incentive Program, which included incentives potentially administered through state-level environmental programs (Section 60012).
Education policy changes
This act introduces new cooperative federalism elements in higher education policy by requiring state validation for access to certain federal student aid. While most administrative authority remains with the U.S. Department of Education, the law conditions federal Workforce Pell Grant eligibility on state certification of training programs, linking federal funding to state-defined workforce needs.[2]
- Creates a new federal-state Workforce Pell Grant program for short-term, non-degree workforce training programs that must be certified by a state governor, in consultation with the state workforce board, as aligned with high-wage, in-demand occupations and stackable credentials (Section 83002).
- Requires state-approved workforce programs to meet federally defined thresholds for completion rates, job placement, and earnings outcomes, creating a conditional federal benefit structure that depends on both state certification and state-supplied labor market data (Section 83002(b)).
- Excludes students from receiving a Federal Pell Grant if non-federal grant aid—including aid from state governments or institutions—covers the full cost of attendance, potentially shaping how states structure and coordinate their own financial aid systems (Section 83004).
Renewable energy revenue sharing
This section reinforces principles of fiscal federalism by directing a portion of federal renewable energy revenues to subnational governments.[2]
- Requires that 25% of federal revenue from solar and wind projects on public lands be paid to the state, and 25% to affected counties, based on project location (Section 50303(b)(1)).
- Specifies that payments to counties are in addition to existing PILT funds, expanding local compensation for federal land use (Section 50303(b)(2)(B)).
- Aligns use of funds with the Mineral Leasing Act, applying existing state and local revenue rules to renewable energy projects (Section 50303(b)(2)(A)).
How does budget reconciliation work?
- See also: Budget reconciliation in U.S. Congress
Most recent budget reconciliation bill: The One Big Beautiful Bill Act is a major legislative package that was passed through budget reconciliation by Republicans during the first year of President Donald Trump's (R) second term. It was signed into law on July 4, 2025.[3] Republican leaders, such as Mike Johnson, have discussed a possible second budget reconciliation bill during the 119th Congress.[4]
This section explains the budget reconciliation process, what can and cannot be included in a budget bill, and the status of the 2025 budget reconciliation bill.
What is the budget reconciliation process?
What can and cannot be included in a budget reconciliation bill?
Budget reconciliation can provide for changes in federal spending, federal revenue, the federal debt limit, or some combination of the three. Changes to social security through the reconciliation process are prohibited.
The restrictions on reconciliation are enforced through the Byrd Rule, through which senators claim provisions are extraneous and should be removed or excluded from the omnibus reconciliation bill. The Byrd Rule states that any provision that meets one of the following criteria can be excluded as extraneous through a point of order made by a senator and sustained by the presiding officer of the Senate (the Vice President):[5]
- it does not make any changes to spending or revenue or to the terms and conditions under which spending or revenues are accomplished;
- it does make changes to spending or revenue but not in compliance with the reconciliation instructions given to the committee in the budget resolution;
- it is not in the jurisdiction of the committee that submitted the provision;
- the changes in spending or revenue are merely incidental to the nonbudgetary policy changes of the provision;
- it increases the deficit for a fiscal year after the fiscal years (a 10-year window) covered by the specific budget resolution and reconciliation instructions; or
- it makes changes to Social Security.
The three most common reasons that points of order have been sustained and provisions removed as extraneous according to the Byrd Rule are:
- no change in outlays or revenues,
- budgetary changes merely incidental to non-budgetary components, and
- outside committee’s jurisdiction.
What are policy initiatives that have been passed through past budget bills?
Democrats used reconciliation to pass the Health Care and Education Reconciliation Act of 2010 -- including the final version of the Affordable Care Act (Obamacare) -- and the Inflation Reduction Act of 2022 -- including funding for environmental and climate-related policies and projects, increased corporate taxes, and the extension of Medicaid expansion.
Republicans used reconciliation in 2018 to pass the Tax Cuts and Jobs Act, including decreased individual income and corporate taxes and allowances for oil and gas drilling on certain federal land.
Democrats tried to enact gun control measures and increase the federal minimum wage to $15 per hour through reconciliation bills in 2015 and 2021, respectively, but Republican senators filed points of order against the amendments according to the Byrd Rule, and the provisions were removed.
Republicans proposed cutting certain Social Security, Medicare, or Medicaid benefits as part of a reconciliation bill in 2017, but Democrats filed points of order against the amendments according to the Byrd Rule, and the provisions were removed.
What is the status of the 2025 budget bill?
- July 4, 2025
President Donald Trump (R) signed the One Big Beautiful Bill Act into law, completing the budget reconciliation process.
- July 3, 2025
The US House of Representatives voted 218 - 214 to pass the Senate-amended version of the One Big Beautiful Bill Act.
- July 1, 2025
After the Senate's vote-a-rama on June 30, the chamber voted 51-50 to pass the One Big Beautiful Bill Act.
- June 19 - 29, 2025
- June 11, 2025
The US House of Representatives passed edits to the One Big Beautiful Bill Act through a rule resolution (H.Res.492). The edits passed 213-207.
- May 22, 2025
The US House of Representatives passed the One Big Beautiful Bill Act with a vote of 215-214.
- May 18, 2025
The House Budget Committee voted 17-16 to advance the One Big Beautiful Bill Act budget reconciliation bill. This bill consisted of all the House committee bills that were required by the reconciliation instructions in H.Con.Res.14.
- April 10, 2025
The House voted 216-214 to adopt the Senate-amended version of budget resolution HCon.Res.14, completing the budget resolution process.
- April 5, 2025
The Senate voted 51-48 to pass the amended version of the House budget resolution (H.Con.Res.14) after a vote-a-rama.
- February 25, 2025
The House voted 217 to 215 to adopt their budget resolution.
- February 13, 2025
The House released the text of a proposed budget resolution.
Text of reconciliation bills and drafts
The section below provides the final bill text.
The section below provides the text of the bill as of May 20, 2025.
The section below provides the text of the bill as of May 18, 2025.
See also
More federalism content
Footnotes
- ↑ Politico, "Inside Congress Live," July 3, 2025
- ↑ 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Congress.gov, "H.R.1 - One Big Beautiful Bill Act," accessed July 3, 2025
- ↑ AP News, "Trump signs his tax and spending cut bill at the White House July 4 picnic," July 4, 2025
- ↑ Politico, "Plans for second GOP megabill face growing skepticism," accessed September 8, 2025
- ↑ Congressional Research Service, "The Budget Reconciliation Process: The Senate’s 'Byrd Rule.'" December 12, 2024
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