Savings allow families to start a small business, move to a better neighborhood, or simply handle unexpected bills. A reliable car can be necessary to get to work. But restrictive policies under the Supplementary Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) can make it impossible for people receiving these benefits to accrue even modest savings. These programs often apply “asset limits,” which deny eligibility to people with savings or other assets above very low levels.

These asset limits run counter to the objectives of TANF and SNAP—to support recipients and enable them to advance economically. Asset limits push people to fall deeper into poverty by forcing them to deplete their resources when applying for assistance and preventing them from accumulating savings when receiving assistance. CLASP has just released two briefs that draw on recent research from the Pew Charitable Trusts  and the Urban Institute and examine the problematic effects of asset limits. One brief looks at asset limits holistically and the other brief focuses on the role of vehicles in promoting economic opportunity, and how public policies—including vehicle asset limits and license suspensions—can interfere with low-income people’s access to such opportunity.

States have significant power to set asset limits—or to eliminate them entirely—under both TANF and SNAP, and there is great variation in the states’ policies. Thirty-seven states and the District of Columbia deny TANF to applicants with total assets at or below $3,000—which include both liquid or non-liquid assets such as money in bank accounts, certificates of deposit, stocks, and bonds—while eight states have eliminated the TANF asset limit altogether. Meanwhile 36 states have eliminated their SNAP asset limit, while only 10 states have left asset limits for SNAP applicants at the default standard of $2,250. CLASP recommends that states eliminate both the SNAP and TANF asset limits; doing so streamlines the application process and reduces administrative costs on states, while promoting economic security for recipients.

States also have the power to decide how to treat vehicles for purposes of the asset limit. Under SNAP regulations, states must disregard up to $4,650 of the value of a single car per household and may entirely exclude one vehicle per household. States have great variation in TANF vehicle asset limits, from Georgia, where the vehicle asset limit is $1,500 (with some stipulations on how the vehicle is used) to states like Kentucky, where all vehicles owned by the household are excluded from asset limits.

Vehicle asset limits have negative effects on SNAP and TANF applicants and recipients. Research suggests that access to a car improves the likelihood that current and recent welfare participants will gain employment, obtain higher wages, and transition off of public assistance. However, in some cases, vehicle asset limits force applicants to sell a car that exceeds the limit to comply with SNAP and TANF thresholds. This can leave people without a car at all, lead people to lose the equity in their car, or force people to trade in their car for one that is less expensive and potentially less reliable and more costly to maintain. States that have retained the asset limit should exclude the full value of one vehicle per adult household member.

Eliminating asset limits is useful for families and state governments. Families can save for unexpected events and build a stronger financial future while also gaining better access to education, training, and jobs on their path to economic independence. State governments reap the rewards alongside families by lowering administrative costs and saving staff time. That’s why taking steps to eliminate the asset limit for SNAP and TANF is a win-win.