Legislative and Policy Analysis
Section 10104: Restrictions on Internet Expenses
1. Executive Summary
Section 10104 of the One Big Beautiful Bill Act (OBBBA) of 2025 enacts a major structural change to the Supplemental Nutrition Assistance Program (SNAP) benefit calculation methodology. By amending Section 5(e)(6) of the Food and Nutrition Act of 2008 (7 U.S.C. 2014(e)), this provision permanently prohibits households from including internet service fees and connection costs in the “excess shelter expense deduction” calculation.
This legislative change directly reverses a 2024 administrative modernization by the United States Department of Agriculture (USDA) that had integrated broadband expenses into the Standard Utility Allowance (SUA). According to the Congressional Budget Office (CBO), Section 10104 will reduce the federal budget deficit by $11.00 billion over the 2025 to 2034 period. While proponents celebrate this as a necessary step for fiscal discipline and program integrity, critics argue it disproportionately penalizes low-income families by widening the “digital divide” and forcing a choice between food security and essential digital connectivity.
2. Statutory Mechanics and Policy Background
To understand how Section 10104 operates, it is necessary to examine the formula used to calculate a household’s monthly SNAP benefit allotment:
- Gross Income Assessment: A household’s total gross income is calculated.
- Standard and Earned Income Deductions: Standard deductions and earned income exclusions are applied to determine Net Income.
- Excess Shelter Expense Deduction: Under 7 U.S.C. 2014(e), households can deduct shelter-related costs (including rent, mortgage, and utilities) that exceed 50% of their net income, up to a statutory cap.
- Standard Utility Allowance (SUA): States utilize SUAs—standardized estimates of heating, cooling, water, and electricity costs—to simplify this shelter deduction instead of requiring recipients to submit individual utility receipts monthly.
In 2024, the USDA updated federal guidelines to allow states to include home internet connection costs within their SUA formulas, recognizing that broadband is a modern necessity for employment, schooling, and public services. Section 10104 completely dismantles this inclusion, explicitly prohibiting the deduction of internet service expenses.
3. Day-to-Day Government Operational Transitions
The transition to Section 10104 compliance has forced significant, immediate adjustments across both federal and state administrative systems:
A. State Eligibility System Upgrades
State human services agencies must immediately reprogram their integrated eligibility engines (such as California’s CalSAWS, Texas’s TIERS, and Florida’s ACCESS) to decouple internet expenses from utility and shelter deduction calculators. The collective cost of these database updates across all 50 states is estimated at $45.00 million.
B. Caseworker Workflow and Interview Restructuring
Caseworkers must adjust intake and recertification interviews. Rather than accepting bundled telecommunication bills (which often package internet with phone and television services), workers must manually review bills to disallow the broadband portion, or direct applicants to submit separate documentation for energy-only utilities. This increases processing times and has led to localized application backlogs.
C. Federal Quality Control and Error Penalties
The USDA’s Food and Nutrition Service (FNS) issued its formal implementation guidance on May 8, 2026, clarifying that any state-level inclusion of internet costs in SNAP calculations after the statutory effective date constitutes a payment variance. Under the OBBBA’s companion cost-sharing rules (Section 10105), states with Quality Control Payment Error Rates exceeding 6% face severe financial penalties. Consequently, state administrators are executing aggressive auditing campaigns to ensure absolute compliance, leaving no room for human error at the caseworker level.
4. Downstream Socio-Economic Impacts on Consumers
The exclusion of internet expenses from shelter calculations has a direct, regressive impact on the purchasing power of low-income households:
- Direct Reduction in Monthly Allotments: The CBO projects that monthly SNAP benefits will decrease by an average of $10 for approximately 65% of all participating households. This benefit reduction directly impacts 14.30 million households, affecting roughly 26.65 million low-income individuals.
- The “Connectivity vs. Nutrition” Trade-off: Broadband internet is no longer a luxury; it is the primary pipeline for modern economic participation, including homework assignments for K-12 students, remote work shifts, job search activities, and telehealth appointments. Stripping this deduction forces families to choose between cutting their home broadband subscriptions or reducing their weekly food budget.
- Administrative Churn: The exclusion of a simplified internet allowance has increased the verification paperwork burden on households. Families who must now compile itemized, non-internet utility statements face higher rates of “administrative churn,” where eligible recipients temporarily lose benefits simply due to paperwork submission delays.
5. Downstream Impacts on Businesses and the Private Sector
The macroeconomic ripple effects of Section 10104 extend far beyond public assistance agencies, directly impacting commercial industries:
A. Grocery Retailers and Food Manufacturers
The $11.00 billion federal contraction in SNAP spending translates to a direct loss of approximately $1.10 billion per year in grocery store sales. Major national supermarket chains (such as Walmart, Kroger, and Albertsons) and independent corner markets in low-income neighborhoods will experience immediate downward pressure on SNAP-redeemed revenues, compressing thin retail margins and reducing regional demand for agricultural commodities.
B. Telecommunications and Internet Service Providers (ISPs)
Low-income households are highly price-sensitive. Deprived of the SNAP shelter offset, millions of families are projected to terminate or downgrade their home internet subscriptions. ISPs will face a surge in customer churn, increased accounts-receivable delinquencies, and a decline in new subscriber sign-ups within rural and urban low-income ZIP codes.
6. Environmental and Climate Impact Evaluation
While Section 10104 is primarily a fiscal and nutrition policy, its real-world implementation carries distinct, measurable consequences for localized emissions and environmental sustainability:
A. Vehicle Miles Traveled (VMT) and Transportation Sector Emissions
Under the OBBBA’s broader reforms (such as Section 10102), able-bodied SNAP recipients face rigid, expanded work-reporting and community-engagement mandates of 80 hours per month.
- The Disconnected Transit Cycle: When households drop home internet services due to the financial squeeze of Section 10104, they lose the ability to report their hours online or utilize state-level digital client portals.
- Increased Transit Trips: Recertification, job searches, and hour reporting must now be conducted physically. Recipients must travel to county welfare offices, American Job Centers, or public libraries to use public computers.
- Emissions Surge: This drives a significant increase in physical, local transit trips. Given that low-income households are more likely to rely on older, less fuel-efficient personal vehicles or fossil-fuel-powered public transit, this rise in regional VMT translates directly to increased localized carbon dioxide, nitrogen oxide, and particulate matter emissions.
B. Administrative Reversion to Paper-Based Processing
To the extent that SNAP recipients lose home broadband access, both state agencies and program clients are forced to abandon digital, paperless administrative channels:
- Paper Demands: Program communications, document verifications, and monthly reporting forms shift back to physical mailings.
- E-Waste and Forest Resource Depletion: This dramatic increase in paper document generation, printing, and shipping expands the carbon footprint of state agencies and contributes to municipal solid waste. Furthermore, it reverses long-standing public sector initiatives designed to transition social safety net programs to carbon-neutral, zero-paper operational baselines.
7. Policy Perspectives: Proponents vs. Opponents
| Policy Dimension | Proponents’ Perspective | Opponents’ Perspective |
|---|---|---|
| Fiscal and Deficit Control | Saves taxpayers $11.00 billion over ten years, reinforcing federal fiscal consolidation. | Achieves savings by directly reducing the food budgets of 14.30 million struggling households. |
| Defining Program Scope | Restores SNAP strictly to its core statutory mandate—providing food assistance, not funding utility expansions. | Ignores the modern economic reality that home broadband is as essential as electricity or running water. |
| Administrative Simplicity | Eliminates the administrative complexity of verifying and auditing fluctuating internet bills. | Promotes administrative churn, forcing clients into physical travel and paper-based verification cycles. |
8. Implementation Timeline and Key Milestones
| Phase / Milestone | Target Date | Operational Actions and Impacts |
|---|---|---|
| Legislative Enactment | July 4, 2025 | President signs the OBBBA (P.L. 119-21), establishing Section 10104 restrictions. |
| Effective Implementation | October 1, 2025 | States must legally exclude internet fees from all new and recertified SNAP shelter deductions. |
| Guidance Publication | May 8, 2026 | USDA FNS releases “Restrictions on Internet Expenses – Q&As #1” to address compliance questions. |
| Federal Auditing Baseline | Ongoing 2026 | Quality Control reviews actively penalize states displaying internet deductions in benefit calculations. |
9. Key References and Sourcing
- Congressional Budget Office. (2025). Estimated Effects of Public Law 119-21 on Participation and Benefits Under the Supplemental Nutrition Assistance Program. Congressional Budget Office Reports. CBO SNAP Analysis Link
- USDA Food and Nutrition Service. (2026). SNAP Provisions of the One Big Beautiful Bill Act of 2025 – Restrictions on Internet Expenses and Treatment of Energy Assistance Payments – Q&As #1. U.S. Department of Agriculture. USDA FNS OBBB Directory
- American Public Human Services Association. (2025). 2025 Budget Reconciliation: Summary of Key Human Services Provisions. Policy Briefs. APHSA Policy Analysis
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