What Is Adjusted Income
Adjusted income is your annual income minus HUD-allowed deductions. This figure determines your tenant contribution, which is the rent you pay directly from your household income.
Calculation and Impact
HUD calculates adjusted income by starting with annual income and subtracting specific deductions. Your public housing authority (PHA) uses the resulting number to establish your rent obligation under the payment standard formula.
The calculation works like this: If your household earns $35,000 annually and qualifies for $8,000 in allowable deductions (such as medical expenses, childcare costs, or disability-related expenses), your adjusted income becomes $27,000. Your tenant contribution is typically 30 percent of this adjusted income, or $675 monthly. The housing authority covers the remaining rent up to the Fair Market Rent limit.
Deductions That Apply
Not all expenses reduce your adjusted income. HUD allows only specific deductions:
- Dependent deduction: $480 per dependent under age 18 (as of 2024)
- Elderly/disabled head of household deduction: $400 per month
- Medical expenses exceeding 3 percent of adjusted income for elderly or disabled household members
- Childcare and attendant care costs for work or education
- Disability assistance expenses and equipment
What This Means for Landlords and Tenants
Landlords receive the difference between the Payment Standard and the tenant's contribution. A tenant with lower adjusted income pays less rent but doesn't occupy a unit with lower Fair Market Rent value. For example, if Fair Market Rent is $1,200 but the tenant's share is only $400, the voucher program pays $800.
Tenants benefit from adjusted income deductions because they reduce monthly rent obligations. Recertification happens annually or biannually depending on your PHA's schedule. Changes in household composition, employment, or expenses can trigger interim recertifications, adjusting your contribution accordingly.
Common Questions
- Does my landlord see my adjusted income amount? No. Landlords receive the voucher payment amount only. HUD regulations do not require sharing your adjusted income figure with property owners.
- Can I request an interim recertification if my income drops? Yes. Most PHAs allow interim recertifications if your household income decreases or deductible expenses increase. You must report changes within 30 days per HUD 24 CFR 960.257.
- What happens if I underreport income? Misreporting income violates your lease and voucher terms. PHAs conduct periodic income verification and can terminate assistance, require repayment of overpayments, and refer cases to HUD for fraud investigation.