HUD Issues Income Limits for Fiscal Year 2025

On April 1, HUD issued the fiscal year 2025 income limits that determine eligibility for various HUD-assisted housing programs, including Public Housing, Section 8 Project-Based Rental Assistance, Section 8 Housing Choice Vouchers, Section 202 Housing for the Elderly, and Section 811 Housing for Persons with Disabilities programs. These income limits are based on data from the American Community Survey (ACS) and other sources, and they define the maximum income a household can earn to qualify for or be targeted for assistance.

Eligibility for HUD programs is based on three income tiers—extremely low income (less than 30 percent of the area median income), very low income (less than 50 percent), and low income (less than 80 percent). These limits are adjusted by family size and geography to reflect local economic conditions. If your local income limits increased, it’s worth reviewing previously denied applications to see whether slightly over-income households may now qualify under the updated limits. The 2025 income limits became effective immediately and are available at www.huduser.gov/portal/datasets/il.html.

What Changed for 2025

HUD released income limits for nearly 2,500 areas across the country, and this year brought widespread increases. On average, income limits rose by 6.2 percent, with most areas seeing noticeable upward adjustments. While some regions experienced moderate gains, others saw more significant changes—more than 70 percent of the country had increases above 5 percent, and over 40 percent exceeded an 8 percent rise. In fact, 27 percent of areas reached the maximum allowable increase of 9.2 percent, hitting HUD’s cap. At the same time, a small portion of about 5 percent actually saw their limits decrease.

These larger-than-expected increases come as a surprise, especially since forecasts had suggested a more modest national average closer to 3 percent. The key reason for the higher numbers lies in HUD’s shift in methodology for calculating inflation. Until this year, HUD used the Consumer Price Index (CPI) to project forward the median income data from the American Community Survey (ACS). For 2025, however, HUD adopted a new approach, basing the projection on changes in per capita wage and salary income instead.

To understand the impact of this change, consider an area with a median income of $100,000. Under the old CPI method, that figure would have been adjusted to approximately $104,600 for 2025. With the new wage-based method, it becomes $108,000, resulting in a higher income limit for that area. This shift in methodology played a major role in pushing many areas above the anticipated range and continues to influence how eligibility for affordable housing is determined nationwide.

Continued Use of the Income Cap

HUD continues to apply restrictions on how much income limits can rise in a single year, maintaining a level of control to ensure stability across housing programs. In 2024, the agency introduced an additional safeguard known as the “cap-on-cap” rule. This rule sets a ceiling on annual increases by allowing the cap to be either 5 percent or twice the national median income change, whichever is greater, but never more than 10 percent.

For the 2025 income limits, the national median income rose by 4.6 percent based on the most recent American Community Survey data. As a result, the allowable cap for this year was set at 9.2 percent. According to HUD, more than a quarter of all areas reached that limit. Without the cap in place, the increases in those areas would have averaged closer to 14 percent.

HUD’s reasoning behind maintaining and refining this cap policy centers on protecting tenants from abrupt rent hikes that could result from large income limit jumps. It also helps reduce the risk of statistical anomalies having an outsized impact, particularly in areas with smaller sample sizes where data fluctuations can distort trends. Beyond that, the cap brings a level of predictability that supports developers and property managers in planning for affordable housing projects with greater confidence.

New Area Definitions in 2025

For 2025 income limits, HUD implemented updated metropolitan statistical area definitions from the Office of Management and Budget (OMB) Bulletin No. 23-01. However, to reduce disruptions in many cases that would have been caused by large changes due to area definition changes, HUD created custom area definitions known as HUD Metropolitan Fair Market Rent Area.

One major change occurred in Connecticut, which now has 42 new defined areas. While the overall average income limit change across these areas was about 1 percent, the impact varied widely. Ten areas saw increases greater than 9 percent and 17 areas had decreases of 5 percent or more.

Use New Income Limits for New Certifications

All new certifications effective April 1 or later must use the fiscal year 2025 income limits. Managers should remember that income limits are considered only at move-in and, in very limited cases, at the initial certification [HUD Handbook 4350.3, par. 3-4]. Income limit changes don’t affect current residents’ eligibility for the HUD Multifamily Housing programs (Section 8, PRAC, etc.) when that resident is already receiving subsidy/housing assistance.

If you’ve already extended a unit offer and your new resident’s income exceeds the new income limit, you can still honor that move-in. According to HUD’s RHIIP ListServ #293, if a unit becomes available and an applicant is selected from the waiting list, is processed for eligibility, and meets all eligibility requirements at the time of processing, the applicant is eligible to move into the unit even if new income limits have been published. If this situation applies, be sure to document the household file appropriately.