RESOLVING THE LEDGER
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0 Share Newsweek is a Trust Project member See more of our trusted coverage when you search. Prefer Newsweek on Google to see more of our trusted coverage when you search. At least 34 states and the District of Columbia have ended or substantially changed a practice that allowed child welfare agencies to use Social Security benefits belonging to children in foster care to help pay for their care.
The reforms have accelerated following pressure from the Trump administration, which has urged states to stop what officials have described as the "orphan tax." The term does not refer to a formal tax, but to the use of Social Security survivor benefits intended for children to offset foster care costs.
According to the federal government's Child Welfare Information Gateway, there are more than 330,000 children nationwide in foster care .
The effort to end the practice started in 2025. In a letter to governors sent in December last year , Alex Adams, assistant secretary at the Administration for Children and Families (ACF), called on states to stop taking those benefits from children in foster care.
"There is no moral justification for why orphans should have to pay their own way," Adams told NPR in January 2026. "They are not in foster care by any fault of their own. And they certainly should not be asked to pay their own bill."
The federal government’s guidance on how child welfare agencies serving as Social Security representative payees must handle these benefits is set out in the August 17, 2023 joint letter from the Social Security Administration and the Administration for Children and Families.
The guidance says representative payees must use benefits for the beneficiary’s current needs and conserve benefits that are not needed for current maintenance for the beneficiary’s future needs.
Children may qualify for Social Security survivor benefits after the death of a parent who worked and paid Social Security taxes.
When a child receiving those payments enters foster care, a state child welfare agency can become the child’s representative payee, meaning it receives and manages the benefits on the child’s behalf. Some states have historically used part or all of that money to reimburse themselves for the cost of providing foster care. States are legally required to provide foster care to children who need it.
Critics of the practice argue that the money should instead be retained for the child or used for needs beyond the ordinary costs of foster care. A young person whose benefits are diverted could otherwise leave the system without money that might have been available for expenses such as housing or education.
The Department of Health and Human Services (HHS), which oversees the ACF, has argued that survivor benefits reflect contributions made by a child’s deceased parent and should be preserved for the child rather than used to reimburse government agencies.
"When a parent dies, those benefits are meant to help their child—not reimburse the government. Every state should protect these children instead of taking what their families earned, and HHS will keep pressing until they do," HHS Secretary Robert F. Kennedy Jr. said in a July 15 statement.
Children can receive up to 75 percent of a deceased parent’s Social Security benefit. The average monthly payment was $1,179 as of July, according to the Social Security Administration.
Oklahoma was among the latest states to act, joining the group on July 15. It was followed later that month by Iowa, Montana and Michigan, while Maine became the most recent addition on August 5.
Oklahoma Governor J. Kevin Stitt said the reform was intended to give young people leaving foster care a stronger financial footing.
"Every child deserves the opportunity to pursue the American Dream and build a brighter future, regardless of the circumstances they were born into. I’m proud that Oklahoma can join the effort to protect Social Security survivor benefits earned on behalf of children in foster care and ensure they're used in the best interest of each child," he said. "Oklahoma is proud to lead on reforms that help young people leave care with greater opportunity and a stronger foundation for success."
The push to change the handling of survivor benefits is part of a broader set of foster care policies pursued by the Trump administration. Earlier this year, first lady Melania Trump launched an investment account program for children in the foster care system.
The initiative was made possible through the One Big Beautiful Bill Act, signed by President Donald Trump last year. The Fostering the Future accounts extend the $1,000 Trump Account program, which became available to U.S. newborns this year, to children in foster care .
Under the program, the U.S. Treasury allows state child welfare agencies that serve as legal guardians for eligible children with Social Security numbers to open Trump Accounts on their behalf.
For children outside the foster care system, Trump Accounts are ordinarily opened by their parents.
HHS has said it intends to continue pressing states that have not yet changed their policies.
Contact Newsweek editors on this story: Ben Kelly and James Debens
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