This paper presents microsimulation results of the impact of the new Serbian Draft Social Welfare Law on income distribution and poverty outcomes across households. Microsimulations were conducted using SRMOD - a Serbian tax-benefit microsimulation model. The new Draft Law, expected to be adopted by the Parliament during 2011, introduces a number of changes into the eligibility criteria for the last-resort social assistance programme, which is expected to significantly improve the targeting of social assistance, both in terms of its expanded coverage and increases in the amounts of social assistance received by the already eligible households. Simulation results suggest that the envisaged changes in legislation will increase MOP eligibility of households in the poorest income decile by 18.4%, while the average amount of MOP they receive would increase by about 10.6% per adult equivalent. Finally, total fiscal expenditures on MOP would increase by 34.6%. Therefore, the proposed changes in legislation would, according to the microsimulations, to a certain extent improve the targeting of social assistance as well as its capacity to cater to the needs of the most deprived members of the society.