On January 31, 2024, the Department of Housing and Urban Development (HUD) published an updated list of income excluded for HUD-assisted housing programs. Since the Low-Income Housing Tax Credit Program (LIHTC) must follow HUD rules regarding income determination, these exclusions also apply to the LIHTC program.
Four new income exclusions were added, and existing exclusions were modified to specifically identify which sources of income are excluded from income calculations and asset determinations. This is the first comprehensive update of income exclusions since May 2014, and it incorporates the Housing Opportunities Through Modernization Act (HOTMA) exclusions.
New Income Exclusions
HUD has added four types of income that will no longer be counted for affordable housing program purposes. These include specific tax refunds, allowances for children of some veterans, distributions from ABLE accounts, and emergency rental assistance payments.
Modifications to Existing Exclusions
In addition to adding new income exclusions, HUD is modifying existing exclusions.
It is important to note that HUD’s updated list of federally mandated income exclusions is not a comprehensive list of all exclusions from income. Following are the types of income that are expressly excluded by federal law. Other income exclusions, as listed in various HUD Handbooks and Notice H 2023-10/PIH 2023-27, remain applicable. Also note that the exclusions listed below apply to income only, except where noted concerning assets.
While all these exclusions will be reflected in a future update of HUD Handbook 4350.3, that update is not yet available. Therefore, owners and managers of properties subject to HUD income and asset exclusions should keep this list handy.
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