How Co-Signing Vehicle Loans Impact Food Stamps Eligibility

Food stamps, formally known as Supplemental Nutrition Assistance Program (SNAP) benefits, are designed to help low-income households purchase food. To qualify for food stamps, you need to meet certain financial criteria in terms of income and assets. One of those assets is a car, meaning that a car loan could impact your benefit eligibility. However, this depends on the state, as some states exclude cars as assets regardless of their worth, while others only exclude vehicles under a certain value.

Does co-signing a vehicle loan affect food stamps?

Vehicle asset policies vary by state

Vehicle asset policies vary significantly by state. States have the flexibility to set their own food stamp vehicle asset policies to ensure that needy households can get the help they need and still have reliable transportation.

Most state agencies have adopted broad-based categorical eligibility (BBCE), which allows state agencies to align income and resource limits with their TANF-funded programs. Under BBCE, households are categorically eligible for SNAP if they are eligible to receive a TANF or maintenance of effort (MOE) state-funded non-cash benefit.

States have two methods to exempt vehicles from consideration as assets in the Food Stamp Program policy: aligning food stamp policy to federal TANF or state Maintenance of Effort (MOE)-funded assistance programs, or using the asset rules in a TANF/MOE-funded benefit program for households authorized to receive that benefit.

For example, Alabama, Ohio, Kansas, Utah, and Maryland are among the states that exclude the value of all vehicles in its TANF cash assistance programs. These states have now imported this rule into the Food Stamp Program, ensuring that vehicle ownership will never prevent their residents from getting food stamp assistance.

In many states, the cash assistance vehicle asset rule limit applies to only one vehicle, and households with multiple vehicles are not generally eligible for TANF cash assistance. Federal food stamp rules permit households to own multiple vehicles, albeit vehicles with a very low value.

Additionally, the equity value of unlicensed vehicles generally counts as a resource, with some exceptions. The Food Stamp Act of 1977 required states to count the fair market value of a car as a resource to the extent that the fair market value (FMV) exceeded $4,500.

Car loans and SNAP eligibility

When it comes to car loans, they can impact SNAP eligibility, but it's not a direct relationship. The impact arises from how states consider vehicles as "countable resources." Forty-six states have chosen to exclude at least one vehicle from consideration, recognizing the need for reliable transportation. However, nine states still impose limits on the value of cars owned by SNAP recipients.

The key factor is the fair market value of the vehicle. If the fair market value exceeds a certain threshold, typically $4,650, it may be counted as a resource and impact SNAP eligibility. Licensed vehicles may be excluded from countable resources if they are used for income-producing purposes, generate annual income proportional to their value, or are necessary for long-distance work travel. Additionally, vehicles used to transport disabled household members may be excluded from consideration, regardless of their value.

It's worth noting that the eligibility determination also considers the household's total resources and income. This includes the income and assets of all household members, not just the head of the household. The higher the housing costs, the higher the SNAP benefits tend to be. Conversely, receiving free rent or utilities may lead to a reduction in SNAP benefits.

In summary, while car loans themselves may not be the primary factor, the value of the vehicle purchased with the loan can influence SNAP eligibility. The specific impact varies depending on state policies and the vehicle's fair market value relative to the established thresholds.

Car ownership and food stamps

Car ownership does not automatically exclude you from receiving food stamps. However, the impact of owning a car on your eligibility for food stamps depends on the state in which you reside.

State-level variations

Each state has the authority to set its own food stamp vehicle asset policies, which means there can be significant differences between states. For instance, in 2011, 39 states excluded the value of a vehicle entirely when determining eligibility for food stamps, while 11 states excluded the value of at least one vehicle as a countable resource. Only four states have not exempted any vehicles, although they have increased the vehicle value limit.

Vehicle value

In most states, if the value of your car exceeds $4,650, it will be considered a countable resource and may affect your eligibility for food stamps. If the value of your car is less than $4,650, it typically will not be counted against you. Additionally, certain vehicles are exempt from this limit, such as those used to transport disabled household members or for work, job training, or teenage employment.

Loan considerations

When it comes to car loans, the outstanding loan balance is considered an encumbrance and is deducted from the fair market value of the car to determine its equity value. This equity value is then compared to the general asset test limit, which is typically $2,000 for households without an elderly member and $3,000 for those with one.

SNAP considerations

It is important to note that for SNAP households in many states, resources are not counted, so a vehicle would not impact eligibility. However, specific rules and limits vary by state, so it is essential to contact your local food stamp program agency to understand how your car ownership or loan may affect your eligibility for food stamps.

SNAP income and expenses

SNAP (Supplemental Nutrition Assistance Program, formerly the Food Stamp Program) eligibility is based on income and certain expenses. Gross monthly income must be at or below 130% of the poverty line. For a family of three, the poverty line used to calculate SNAP benefits in the federal fiscal year 2025 is $2,152 a month. Thus, 130% of the poverty line for a three-person family is $2,798 a month or about $33,576 a year. The poverty level is higher for bigger families and lower for smaller families. Net income, or household income after deductions, must be at or below the poverty line.

Assets must fall below certain limits: households without a member aged 60 or older, or who has a disability, must have assets of $3,000 or less, and households with such a member must have assets of $4,500 or less. Certain resources are not counted when determining eligibility for SNAP, including resources of people who receive Temporary Assistance for Needy Families (TANF, also known as welfare).

In terms of expenses, there are several deductions that can be applied to the gross monthly income to determine net income:

• Earned Income Deduction: A 20% deduction from earned income is automatically applied to your SNAP calculation if someone in your household is working.
• Standard Deduction: The standard deduction is based on household size. For a household of 1 to 3 people, the standard deduction is $204. For a household of 4, the standard deduction is $217. This is automatically applied to your SNAP calculation.
• Dependent Care Deduction: A dependent care deduction can be applied to households when an adult household member must pay for childcare in order to go to work, look for work, or attend school.
• Medical Deduction: Elderly (aged 60 or more) or disabled household members can claim medical expenses that are more than $35 per month if they are not paid by insurance or someone else.
• Legally Obligated Child Support Deduction: A client can claim this deduction if they are responsible for paying court-ordered child support payments for a child living outside of their household. If claimed, these payments also do not count as part of your income.
• Shelter Deduction: The SNAP shelter deduction allows a household to deduct housing expenses that are more than half of their net income (total income minus total preliminary deductions). If the SNAP household has no elderly (60 or older) or disabled members, there is a cap on the amount of shelter deduction the household can receive.

The size of a family's SNAP benefit is based on its income and certain expenses. Deductions play an important role in determining SNAP benefits, as not all of a household's income is available for purchasing food; some must be used to meet other needs. The program allows deductions from a household's gross monthly income to determine net income, as outlined above. To calculate the monthly SNAP benefit amount, subtract 30% of the monthly net income from the maximum benefit for the household size.

Regarding vehicle loans, states have flexibility in setting food stamp vehicle asset policies. Forty-six states have used this flexibility to exempt at least one vehicle from consideration in determining food stamp eligibility. However, nine states still limit the value of the cars participants may own. Federal food stamp rules permit households to own multiple vehicles, albeit vehicles with a very low value. In Texas, any car value over the sell cost of a car is considered equity, and will prevent you from getting food stamps.

In summary, while vehicle loans and assets can impact SNAP eligibility and benefits, the specific impact depends on the state in which you live and the value of the vehicle.

SNAP eligibility and vehicle value

SNAP eligibility is based on a household's level of income and assets. The basic rules are set by the Federal Government, but various policy options and waivers allow States to modify many of these rules. States can opt to align SNAP rules regarding vehicle ownership with those of the Temporary Assistance for Needy Families (TANF) program, Supplemental Security Income (SSI), and/or Medicaid, as long as the vehicle rules in those programs are not more restrictive than the Federal SNAP rules.

States have two methods by which they may exempt vehicles from consideration as assets in the SNAP Program policy: aligning SNAP policy to federal TANF or state Maintenance of Effort (MOE)-funded assistance programs or using the asset rules in a TANF/MOE-funded benefit program for households authorized to receive that benefit. Forty-six states have used this flexibility to exempt at least one vehicle from consideration in determining SNAP eligibility. However, nine states still limit the value of the cars participants may own.

The Food Stamp Act of 1977 required states to count the fair market value of a car as a resource to the extent that the fair market value (FMV) exceeded $4,500. For each vehicle, count the higher of the fair market value above $4,650 or the equity value (fair market value less any encumbrances, e.g. outstanding loan balances). Add up the values established for each car, then add the amount determined to the value of the household's other resources and compare the result with the general asset test of $2,000 (or $3,000 for a household with an elderly member). If the total is no more than $2,000, the household meets the resource eligibility requirements for SNAP.

Most state agencies have adopted broad-based categorical eligibility (BBCE), which allows state agencies to align income and resource limits with their TANF-funded programs. Under BBCE, households are categorically eligible for SNAP if they are eligible to receive a TANF or MOE state-funded non-cash benefit. Even if you meet the BBCE income and resource limit in your state, you will still need to meet non-financial eligibility rules and have an income low enough to receive SNAP benefits.

In Texas, any car value over the sell cost of a car is considered equity and will prevent you from getting SNAP benefits. You can only be receiving unemployment and have no assets that have a higher value than your loans or value of the object. In most cases, once you submit your SNAP application, your state agency or local SNAP office will process it and send you a notice telling you whether or not you are eligible for benefits within 30 days.

Frequently asked questions