Background

States have various financial obligations to the federal government, including:

• Remitting federal income tax withholdings from state employee paychecks

• Transferring federal unemployment taxes

• Paying the state's share of jointly funded programs like Medicaid

• Collecting and remitting certain federal fees and penalties

Historically, states have challenged federal policies through lawsuits (as seen with the SALT cap challenges) rather than by withholding payments. There is currently no public indication that any state is planning to withhold payments to the federal government before 2026.

Resolution Criteria

This market resolves to YES if, before January 1, 2026:

• Any U.S. state government officially announces or implements a policy to withhold any legally required payments to the federal government

• The withholding must be deliberate and explicitly acknowledged by state officials as withholding funds owed to the federal government

• The withholding must be of payments the state is legally obligated to make, not merely a refusal to accept federal funding

This market resolves to NO if no state withholds payments to the federal government before January 1, 2026.

Considerations

• Legitimate disputes over payment amounts or timing that are pursued through normal legal channels would not count as "withholding payments"

• A state must actually withhold payments, not merely threaten to do so

• Legislative proposals or discussions about withholding payments that don't result in actual withholding would not trigger a YES resolution

• The withholding must be a policy decision by state government officials, not an administrative error or temporary delay in processing