Section 8 Income: What Counts, Deductions, and Rent Share

For the Housing Choice Voucher program, Section 8 income means the total gross annual income your household expects to receive over the next 12 months, calculated using HUD’s specific rules about what to add, what to leave out, and what to subtract as deductions. That number decides two things: whether you qualify for a voucher based on your area’s income limits, and how much rent you pay out of pocket each month once you have one. Getting it right matters, because unreported income can cost you the voucher and unclaimed exclusions or deductions can cost you money.

How HUD Defines Income

Under federal regulations, annual income is the total of all money and non-cash benefits received by every member of your household, including the head of household, their spouse, and any other family member, even someone temporarily away from home.¹ The calculation is forward-looking. Your public housing agency estimates what your household will receive over the 12 months following admission or your annual reexamination, not what you earned last year.

That matters when circumstances change. If someone in your household just started a new job, the PHA will project 12 months of that income even if only one paycheck has arrived. Funds paid on your family’s behalf to cover debts or living costs also get folded in.

What Counts as Income

Wages and Business Earnings

All wages, salaries, overtime, commissions, fees, tips, and bonuses count at the gross amount, before taxes or any other deductions come out of your paycheck.² Self-employment and business owners are counted on net income: gross receipts minus operating expenses. Straight-line depreciation on business assets is a permitted deduction, but spending on business expansion or paying down business loans is not.³ Cash withdrawn from a business counts as income unless you can show it reimburses money you previously invested.

Benefits and Regular Payments

Social Security, unemployment compensation, disability payments, and workers’ compensation all count.² So do recurring payments from pensions, annuities, insurance policies, and retirement funds, plus alimony, child support, and regular gifts or contributions from anyone outside your household. The test is whether you receive it on a regular schedule. If you do, it almost certainly counts.

What Doesn’t Count

Federal regulations require your PHA to ignore several categories when calculating annual income. The main ones:

Earnings of children under 18 in the household¹
Foster care payments and kinship guardianship payments
Lump sums such as inheritances, insurance settlements for personal or property losses, and capital gains
SNAP, LIHEAP, and other non-cash government assistance
Student financial aid from government, nonprofit, business, or institutional sources when used for tuition, books, supplies, room, board, and required fees; work-study wages and amounts exceeding actual educational costs remain counted
Loan proceeds, since the money must be repaid

Missing an exclusion you’re entitled to will inflate your counted income and raise your rent. Walk through the list with your caseworker at every reexamination.

How Assets Change the Number

Assets like savings accounts, stocks, bonds, and real estate factor into your income based on what they earn, not what they’re worth. For 2026, the threshold that changes the treatment is $52,787 in net family assets, adjusted annually for inflation.⁴

If your total net assets are at or below the threshold, only the actual income they generate (interest, dividends, rental income) gets added to your annual total.⁵ Once assets exceed the threshold, the PHA also calculates an imputed return using a HUD-set passbook savings rate, and your counted asset income becomes the sum of the actual income plus the imputed return.⁶

Separately, families in the Housing Choice Voucher program generally cannot hold net assets over $100,000, adjusted for inflation.⁷ Retirement accounts, educational savings, a work vehicle, tax refunds and credits for 12 months after receipt, and non-necessary personal property worth $50,000 or less in total do not count toward that cap.

Deductions That Lower Your Counted Income

After adding up gross annual income, your PHA subtracts several mandatory deductions to reach your adjusted income. The adjusted figure is what drives your rent, so every deduction you claim directly reduces what you pay.

For 2026, the flat deductions are:⁴

$500 per dependent (each household member who is under 18, a full-time student, or has a disability, other than the head, spouse, or co-head)
$550 for elderly or disabled families, where the head, spouse, or sole member is 62 or older or has a disability

Both amounts are adjusted each year based on the Consumer Price Index.⁸ Elderly and disabled families can also deduct unreimbursed health and medical care expenses, but only the portion exceeding 10 percent of annual income.⁹ Reasonable childcare expenses that allow a family member to work or attend school are deductible as well.

Income Limits and Eligibility

HUD sets income limits based on the Area Median Income where you live, adjusted for family size. Three tiers apply:

Extremely low income: at or below 30 percent of AMI
Very low income: at or below 50 percent of AMI
Low income: at or below 80 percent of AMI¹⁰

Housing Choice Vouchers primarily serve the extremely low-income and very low-income tiers. Federal law requires that at least 75 percent of new voucher admissions go to extremely low-income families, so most people entering the program earn below 30 percent of area median. A family of four in a high-cost city may qualify at a much higher dollar figure than the same family in a rural area, because the median income differs. Larger households get higher ceilings than smaller ones in the same place, and the limits are updated annually. Look up your area’s current numbers on HUD’s income limits page.

How Your Rent Share Is Calculated

Your total tenant payment is the greatest of four figures:¹¹

30 percent of your monthly adjusted income
10 percent of your monthly gross income
Welfare rent (the portion of a welfare payment designated for housing, used in some states)
Your PHA’s minimum rent, which can range from $0 to $50

For most families, 30 percent of adjusted monthly income is the largest of the four and becomes the tenant payment. The voucher covers the difference between that payment and the PHA’s payment standard for your unit size, minus a utility allowance. If you choose a unit that costs more than the payment standard, you pay the extra out of pocket on top of your tenant payment.

Reporting Income Changes Between Reexaminations

Your income doesn’t sit frozen between annual reviews. Under current rules, your PHA must conduct an interim reexamination when your adjusted income drops by 10 percent or more.¹² Report decreases quickly, because a lower rent starts sooner. For income increases, the PHA must also conduct an interim reexamination when the applicable income rises by 10 percent or more, though earned income generally doesn’t trigger this unless the PHA’s written policy says otherwise following a prior interim reduction.

Your PHA can set a threshold lower than 10 percent, so check your local administrative plan. One practical wrinkle: the PHA may skip an interim reexamination for an income increase that happens within the last three months before your next scheduled annual reexamination. The increase gets captured then instead.

How Income Gets Verified and What Happens If You Misreport

PHAs don’t rely on your word alone. Every PHA must use HUD’s Enterprise Income Verification system as a third-party check on employment and income during annual and streamlined reexaminations.¹³ EIV pulls from federal sources including the Social Security Administration and the Department of Health and Human Services and flags discrepancies. Unreported wages, Social Security, or unemployment benefits will almost always surface.

Signing a form with information you know is false qualifies as fraud under federal law. The consequences include:¹⁴

Eviction from assisted housing
Repayment of all overpaid rental assistance
Fines up to $10,000
Up to five years in prison
Permanent ban from future housing assistance
Additional state and local penalties

These apply whether the misreporting happened on your initial application or during a reexamination. Even an honest mistake that led to overpaid subsidies can trigger a repayment requirement, though criminal penalties focus on intentional deception. If your circumstances change and you aren’t sure whether to report it, call your PHA. Agencies handle income fluctuations routinely and would rather adjust your file than open a fraud referral.

1
eCFR. 24 CFR 5.609 – Annual Income
2
U.S. Department of Housing and Urban Development. 24 CFR Part 5 Subpart F – Section 5.609 Annual Income
3
U.S. Department of Housing and Urban Development. MFH HOTMA Video Series for Owners – Determining Income
4
U.S. Department of Housing and Urban Development. 2026 HUD Inflation-Adjusted Values
5
U.S. Department of Housing and Urban Development. Assets, Asset Exclusions, and Limitation on Assets Resource Sheet
6
U.S. Department of Housing and Urban Development. HUD Multifamily Housing HOTMA Training Series – Net Family Assets
7
U.S. Department of Housing and Urban Development. HOTMA Resident Fact Sheet – Asset and Real Property Limitations
8
eCFR. 24 CFR 5.611 – Adjusted Income
9
U.S. Department of Housing and Urban Development. PIH 2023-27 HOTMA Implementation Notice
10
HUD Exchange. CPD Income and Rent Limits
11
U.S. Department of Housing and Urban Development. HCV Guidebook – Calculating Rent and HAP Payments
12
U.S. Department of Housing and Urban Development. HOTMA Interim Income Reexaminations Resource Sheet
13
eCFR. 24 CFR 5.233 – Mandated Use of HUD’s Enterprise Income Verification System
14
U.S. Department of Housing and Urban Development Office of Inspector General. Applying for HUD Housing Assistance? Do You Realize…?