Beginning October 2026, DC lawmakers will reduce cash assistance for families with the fewest resources by eliminating the annual cost-of-living adjustment (COLA) for Temporary Assistance for Needy Families (TANF) benefits—pushing more children into poverty and deepening hardship for those already struggling.
Each year, a COLA helps TANF benefits keep pace with rising prices. DC lawmakers approved cuts in the District’s fiscal year (FY) 2026 financial plan that eliminate these annual adjustments—freezing benefits at current levels, even as the cost of basic needs rises and COLAs continue in other programs. This will drastically reduce the purchasing power of cash assistance for households receiving TANF, including child-only cases. By FY 2030, inflation will erode the value of benefits for a family of three by 9 percent. To prevent inflation from diminishing the value of this already limited support, DC lawmakers must reverse the cuts to TANF’s COLA—an investment of $5.7 million in FY 2027.[1]
DC Implemented a COLA to Protect TANF Benefits From Inflation and Families From Poverty
A COLA is an increase in benefits or compensation designed to offset inflation and preserve purchasing power. Because the value of a dollar today is less than it was five years ago, COLAs are designed to protect already low benefits from erosion over time. They are a standard feature of many public assistance programs, including the Supplemental Nutrition Assistance Program (SNAP) and Supplemental Security Income (SSI) program.
In FY 1991, DC eliminated the COLA for its cash assistance program, then called Aid to Families with Dependent Children (AFDC).[2] When TANF replaced AFDC in 1996, this policy carried over, freezing benefits at levels insufficient to meet families’ needs for nearly two decades. During that period, a family of three received up to $379 per month from FY 1997 to FY 2007, and after lawmakers approved a minimal bump, $428 per month from FY 2008 to FY 2014 in nominal dollars.[3],[4] Inflation steadily eroded the value of these benefits, diminishing families’ purchasing power by 23 percent (or $130) between FY 1997 and FY 2014.
To prevent further erosion, District lawmakers reinstated TANF’s annual COLA in FY 2015.[5] They also phased in substantial benefit increases from FY 2017 to FY 2019 to make up for decades of lost purchasing power, with benefits rising 15 percent in FY 2017, 13 percent in FY 2018, and 12 percent in FY 2019 (Table 1).[6] Since then, DC has continued adjusting TANF benefits annually for inflation based on the Consumer Price Index for All Urban Consumers (CPI-U), with FY 2026 as the last year with a funded adjustment. These adjustments have generally been modest, aside from a nearly 8 percent boost in FY 2024, when inflation surged to a 41-year high amid the COVID-19 pandemic.[7],[8]
TABLE 1.
The reintroduction of a COLA had a measurable impact on the real value of TANF benefits. Figure 1 shows the maximum benefit for a family of three as a share of the Federal Poverty Level (FPL)—the minimum income needed to meet basic needs—from FY 1997 to FY 2025. Between FY 1997 and FY 2014, when no COLA existed and families only received one small benefit bump in FY 2008, this share fell from 36 percent to 27 percent, meaning TANF covered a progressively smaller portion of the income families needed for essentials. That trend reversed once lawmakers reinstated the COLA and strategically phased in three years of large benefit increases, causing TANF benefits to steadily regain value, reaching 37 percent of the FPL by FY 2025. Importantly, even this aggressive restoration strategy only returned purchasing power to roughly its 1997 level (37 percent versus 36 percent); it did not leave families meaningfully better off.
FIGURE 1.
DC residents are likely facing the largest cut to the safety net in a generation, with federal cuts compounding local cuts and affecting TANF, food assistance, and medical assistance, among other programs. These changes will worsen child poverty in the District, which already spiked by 11.2 percentage points between 2023 and 2024, the largest year-to-year increase in a decade.[9]
Cutting TANF’s COLA Will Erode Families’ Purchasing Power As Prices Spike
Eliminating TANF’s COLA will wipe out years of progress, leaving benefits frozen at $803 for a family of three instead of keeping pace with inflation. Nominally, a family of three receiving maximum benefits stands to lose $255 in FY 2027, with losses compounding each year to reach $724 by FY 2029 (Table 2). Over the course of the financial plan, that adds up to $2,429 less in total TANF benefits. To put that figure in perspective, $2,429 is equivalent to nearly a month of housing or two months of food for a family of three.[10] For families in poverty, that support can mean the difference between crisis and stability.
TABLE 2.
Compounding families’ total benefit cuts in nominal dollars is the decline in purchasing power. Without a COLA, families receiving TANF would not only get lower total benefits, but those benefits would also buy less over time as prices rise. By FY 2030, the same $803 that families currently receive will be worth 9 percent less (or $80), meaning their benefits will cover even less essentials, such as food, rent, and transportation.
These projected losses are particularly concerning in DC, where the cost of basic necessities ranks among the highest in the country and is expected to keep rising.[11] Between January 2017 and January 2025, the average monthly cost of groceries for a family increased from $1,040 to $1,340 (up 29 percent) in nominal dollars, while rent rose from $2,060 to $2,540 (up 23 percent). By comparison, the national averages in January 2025 were $1,020 and $2,020, respectively.[12]
While inflation affects everyone, it disproportionately harms households with low incomes, including those receiving TANF, because they have less flexibility to adjust their household purchases as prices rise. Research shows households with low incomes devote a far larger share of their income to essentials (77 percent) compared with higher-income households (31 percent); this leaves them with little room to cut discretionary costs.[13] Meanwhile, many of the essentials they do purchase may already be from low-cost brands.[14]
In addition, several studies have found that the consumption baskets of households with lower incomes have experienced higher than average inflation over time. For example, a working paper from the Bureau of Labor Statistics found that the prices of goods and services purchased by the households with the lowest incomes rose faster than the overall CPI from 2003 to 2018, while those for the highest-income households rose more slowly.[15]
DC lawmakers’ decision to cut TANF’s COLA—designed to protect households least able to absorb rising costs—is particularly unjust, given that they continue to fund automatic and inflationary adjustments that primarily benefit middle- and higher-income residents. For instance, DC lawmakers have maintained the following COLAs or similar inflationary adjustments:
- Estate taxes: DC increases the zero-bracket amount—the portion of an estate exempt from taxation—each year through a COLA. From 2025 to 2026, DC raised it 2.4 percent, from $4,873,200 to $4,988,400.[16],[17]
- Recordation taxes for first-time homebuyers: DC charges first-time homebuyers a reduced recordation tax rate, which applies only to homes below a set maximum purchase price. DC raises this maximum annually based on the Washington Area CPI-U. Between 2025 and 2026, it increased 3.2 percent, from $753,000 to $777,000.[18],[19]
- Housing in Downtown (HID) abatement: The HID abatement offers commercial property owners a 20-year exemption on office buildings that they convert to residential property. The allotment for this abatement is set to skyrocket from $5,000,000 in FY 2027 to $41,000,000 million in FY 2028 and has a 4 percent increase each year after, in perpetuity.[20]
Protecting Low-Income Families Requires Preserving TANF’s COLA
To preserve families’ purchasing power and prevent further erosion of already modest assistance, DC lawmakers must reverse the cut and maintain TANF’s COLA. Failing to do so will push families who are already struggling deeper into hardship, even as the District continues to protect the value of benefits in other programs. In the face of budget pressures, policymakers should not balance the books on the backs of low-income families with children; ensuring they can meet basic needs must remain a core priority.
