A new rule announced Thursday is intended to yield a more accurate census of people with Hispanic, Middle Eastern and North African heritage.

Why it matters: Critics have long said the government's approach to asking about people's race or ethnicity is confusing or misrepresentative — and the stakes are huge when it comes to the distribution of billions in federal funds.

• This is the first time in nearly three decades that the government has changed how it asks these questions, and supporters say it could lead to more accurate data collection.
• The Office of Management and Budget announced the changes.

State of play: The government will now use a single, combined race and ethnicity question, per the new rule, which is scheduled to be published tomorrow.

• It is intended to provide a more accurate look at the U.S. Hispanic population — and for the first time will have a category for people of Middle Eastern and North African (MENA) heritage.
• Census respondents will have the option to pick multiple categories at the same time from the same section, such as "Black," "American Indian" and "Hispanic."
• But critics have warned that some may not know they can pick several, which can result in Afro Latinos, for example, not being accurately captured.

Between the lines: Hispanics have long said the two-question setup — one asking about race and the other about ethnicity — didn't capture the diversity among Hispanics, who are of many different races.

• In the 2020 census, just a little over 43% of Hispanics either did not report a race or were classified as "some other race." That's about 23 million people.
• Domingo Garcia, national president for the League of United Latin American Citizens (LULAC), says he expects the percentage of respondents who identify as Hispanic will jump by at least 10 percentage points in the 2030 census because of the new rule.
• "I think that reflects what we're seeing at the school districts and what we're seeing informally in the workforce," Garcia says.

Americans with Lebanese, Iranian, Egyptian and Syrian backgrounds, for example, have for decades been encouraged to mark "white" under race even though many don't identify as such. Per the 2020 census, about 3.5 million residents identify as MENA.

• The addition of Middle Eastern and North African categories "should have been done a decade ago," says Karthick Ramakrishnan, founder and director of AAPI Data.
• "When it came to hate crimes and other acts of discrimination, we saw significant interests among (MENA) communities to say we need to have our people counted, and we are not the same as white people."
• Arab American Institute executive director Maya Berry said in a news release that the changes "will have a lasting impact on communities for generations to come, particularly Arab Americans, whose erasure in federal data collection will finally cease."

Yes, but: The institute criticized the exclusion of Black Arabs and Armenian Americans from the new Middle Eastern and North African category.

Our thought bubble, via Axios' Niala Boodhoo: Young people say they reject these labels, especially Middle Eastern, being imposed upon them. That's why you're hearing on college campuses phrases like APIDA — which stands for Asian, Pacific Islander and Desi American — or SWANA, which stands for Southwest Asian and Northwest Africa.

• To me, this raises the most interesting question— who gets to decide these definitions?

The big picture: The U.S. Census Bureau said in a statement that it "commends the scientific integrity and collaboration with our fellow federal statistical agencies and departments" throughout the process of creating the new rule.

Flashback: Advocates have been pushing for the changes for decades. In 2022, the government began taking steps to change the rules, convening multiple agencies and seeking public input.

What's next: The next census will be in 2030.

Go deeper: Axios Explains: Arab Americans' Michigan primary protest rooted in feelings of invisibility

Editor's note: This story has been updated with new developments.