Capitol to Capitol | Dec. 29, 2025

Capitol to Capitol | Dec. 29, 2025

Questions? Please use the email icon at left to contact NCSL's State-Federal Affairs Division.

Administration Updates

Department of Agriculture

USDA Introduces Rule Expanding Crop Insurance for Farmers

The department's Federal Crop Insurance Corporation announced a new final rule to streamline and clarify crop insurance policies, modify regulations to align with the One Big Beautiful Bill Act and cut regulatory burdens. Key changes in the Expanding Access to Risk Protection rule include removing the "insured" requirement from the "1 in 4" prevented planting rule, allowing policyholders who switch approved insurance providers to submit production reports directly to their new provider, and eliminating termination, cancellation and end-of-insurance dates from federal regulations.

Departments of Agriculture and Health and Human Services

The Departments Unveil Regenerative Pilot Program

The USDA and Department of Human Services unveiled a $700 million pilot program aimed at helping American farmers adapt regenerative agriculture practices, including improving soil health, enhancing water quality, reducing barriers to entry for conservation programs and boosting long-term productivity. The USDA is allocating $400 million from the Environmental Quality Incentive Program and $300 million from the Conservation Stewardship Program to fund the first year of Regenerative Pilot Program projects.

Department of Transportation

DOT Announces $1.5B in Funding for Infrastructure Projects

The fiscal year 2026 funding opportunity will be administered through the Better Utilizing Investments to Leverage Development Grants. Funding will be awarded to projects that prioritize increasing safety measures, expanding transportation options for American families, supporting U.S. energy dominance, improving roadway capacity and making transportation more affordable. Applications for funding are due Feb. 24, 2026, at 5 p.m. ET.

Department of Health and Human Services

Administration for Children and Families Asks States to Act on Federal Benefits for Foster Youth

The federal government sent letters to the governors of 39 states directing them to change their practices around Social Security survivor benefits for foster youth. Those states currently divert survivor benefits to state child welfare agencies to pay for the cost of foster care. The ACF directs states to end this practice and instead preserve the benefits to support the unmet needs of youth in foster care, and as they transition out of the system. Read the press release here.

Medicaid Continuity During Incarceration

States will be required to maintain Medicaid and CHIP eligibility for incarcerated adults and pregnant women beginning Jan. 1, 2026. Coverage continuity for incarcerated youth is already guaranteed under current law. The new requirement does not change the long-standing prohibition on using federal Medicaid funds for most health care services during incarceration-commonly referred to as the inmate exclusion. Limited exceptions remain in place, including:

1. Inpatient hospital services delivered outside a correctional facility.
2. Certain services for eligible juveniles, such as screenings, diagnostic services, referrals and targeted case management.
3. Additional services that states may choose to cover.

States may either suspend eligibility during incarceration and reactivate it upon release, or keep individuals enrolled while restricting benefits to allowable services. However, children and pregnant women must retain eligibility throughout any continuous eligibility period, and states must provide required prerelease services for juveniles.

To implement these changes, states will need to coordinate closely with justice agencies to monitor incarceration status. They must also notify individuals before suspending coverage and clearly explain their rights.

Federal funding is available to support approved upgrades to state information technology systems.

Read more in the Centers for Medicare & Medicaid Services' informational bulletin.

NCSL Contact: Lauren Kallins

Department of the Treasury

New Tax Credit Scholarship Instructions for States and DC

The tax credit scholarship created by the One Big Beautiful Bill Act allows states and Washington, D.C., to decide whether to participate in the program, which will provide a dollar-for-dollar tax credit of up to $1,700 for individuals who donate to eligible scholarship-granting organizations. The credit goes into effect on Jan. 1, 2027. While states await guidance and regulations from the Treasury, the Internal Revenue Service has created a process for states to opt in to the program beginning on Jan. 1, 2026. Read the announcement.

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