HUD’s 2025 Inflationary Adjustments and Passbook Savings Rate: Key Updates for Housing Professionals
HUD recently released its annual inflationary adjustments for 2025, which impact various tasks such as income certifications and asset level determinations under the Housing Opportunity Through Modernization Act (HOTMA). These updates are crucial for housing professionals working in Multifamily, public, and Indian Housing programs, ensuring that household income calculations align with current economic conditions. Many of the changes will also impact the LIHTC program.
Annual Adjustment Process
HUD calculates the inflation factor each year before September 1 and posts the revised inflation-adjusted values effective for the upcoming calendar year. The revised amounts become effective on January 1. Additionally, HUD publishes the updated passbook savings rate, which is used to calculate imputed asset income based on data from the Federal Deposit Insurance Corporation (FDIC).
2025 Inflationary Adjustments
The inflation-adjusted thresholds apply to various aspects of HUD’s housing programs. Below are the key figures that will take effect on January 1, 2025:
1. Eligibility Restriction on Net Family Assets
- 2024 Threshold: $100,000
- 2025 Threshold: $103,200
- Implication: In 2025, families with net assets exceeding $103,200 are ineligible for assistance under the Public Housing or Housing Choice Voucher programs. This threshold ensures that assistance is directed toward families with the greatest need.
2. Imputed Income from Assets Threshold
- 2024 Threshold: $50,000
- 2025 Threshold: $51,600
- Implication: In 2025, if a family’s net assets exceed $51,600 and it is impossible to calculate the actual return on an asset, imputed income must be computed using HUD’s current passbook savings rate. Imputed income is not determined for assets below this threshold.
3. Non-Necessary Personal Property Threshold
- 2024 Threshold: $50,000
- 2025 Threshold: $51,600
- Implication: In 2025, the combined value of non-essential personal property up to $51,600 is excluded from net family assets. Items like vintage collectibles and recreational boats are considered under this category.
4. Self-Certification of Assets Threshold
- 2024 Threshold: $50,000
- 2025 Threshold: $51,600
- Implication: In 2025, PHAs and Multifamily owners may accept a family’s self-certification that their assets do not exceed $51,600, simplifying the verification process. However, complete verification is required every three years.
Unchanged Thresholds for 2025
Certain thresholds remain unchanged for 2025, ensuring consistency in specific deductions and exclusions:
- Mandatory Deduction for Elderly and Disabled Families: Remains at $525.
- Mandatory Deduction for a Dependent: Remains at $480.
- Income Exclusion for Earned Income of Dependent Full-Time Students: The deduction remains at $480 per dependent.
- Income Exclusion for Adoption Assistance Payments: The deduction remains at $480 per child.
Passbook Savings Rate Update
Alongside the inflationary adjustments, HUD has updated the passbook savings rate, which is essential for income certifications involving assets exceeding $51,600. The new passbook rate for 2025 has been set at 0.45%, up from 0.4% in 2024. This rate calculates imputed income from assets where actual returns cannot be determined.
To ensure timely implementation, HUD calculates the passbook rate in July each year using FDIC data from the second quarter (April, May, and June). The updated rate becomes effective for all reexaminations on January 1.
Conclusion
These annual adjustments and updates are crucial for housing professionals to maintain compliance with HUD regulations. By aligning asset and income calculations with current economic conditions, HUD ensures that housing assistance remains fair and equitable. As these changes take effect on January 1, 2025, housing professionals should update their procedures to reflect the new thresholds and passbook rate, ensuring accurate and compliant income certifications for the upcoming year.