Measuring the Impact of Earned Income Disregards on Initial VS Ongoing Eligibility in the TANF Program

• In Event: Measuring and Modeling Cross-State Variation in Social Policy for Children and Families

Abstract

Families must generally have very low income to be eligible for TANF cash assistance, but states have substantial flexibility in determining how this income is counted and which thresholds are used to determine eligibility. Income requirements may also differ for families based on the number of months of assistance they’ve already received, in part due to varying earned income disregards designed to incentivize new employment or increased earnings (Falk and Landers 2026). These policy variations can create substantial differences in the income that would allow families to become and remain eligible for cash assistance across states.This analysis employs the Welfare Rules Database (WRD) to better understand state-level variation in the maximum allowable earnings for families receiving assistance. The WRD is a comprehensive resource for researching and comparing TANF cash assistance policies across the 50 states, DC, and territories. The database is updated and verified on an annual basis and includes information on a wide range of topics, ranging from initial eligibility rules to policies for families transitioning off TANF cash assistance.  We first use the policy information from the WRD to compute the maximum amount of earnings a family of three can have and still be eligible for cash assistance in each state/territory. Because eligibility rules can vary based on months of program receipt, we compare the maximum allowable earnings at initial application and after receiving benefits for one year to better understand the impact of increased work or income on overall eligibility. In about three fifths of the states and territories, the maximum amount of earnings for technical eligibility differed at initial application when compared to allowable earnings after a year on the program.Our analysis also combines state-level policy data from the WRD with the microsimulation abilities of the Analysis of Transfers, Taxes, and Income Security (ATTIS) model. ATTIS estimates eligibility by applying each safety net program’s detailed eligibility policies, including both federal rules and state variations, to the individuals in the American Community Survey (ACS) data. We use ATTIS to estimate the total number of TANF-eligible people in each state under existing income eligibility policies, and then we assess the impact of earned income disregards on eligibility at application and after one year of assistance.

Author

• Ilham Dehry, Urban Institute
  Presenting Author