On May 1, 2026, the U.S. Department of Housing and Urban Development (“HUD”) released the 2026 Income Limits, which determine eligibility for HUD‑assisted housing programs and Low‑Income Housing Tax Credit (“LIHTC”) properties. The average annual change across HUD areas is 3.4%, with a maximum allowable increase of 10% for FY 2026 and 221 areas subject to the cap. The maximum increase is the greater of 5% or twice the change in national median family income unless a LIHTC development is eligible for Housing and Economic Recovery Act ("HERA") Special income limits. 

These income limits are critical for developments funded through federal rental housing programs, including LIHTC and tax‑exempt private activity bond (“PAB”) financing, as they establish the maximum income thresholds for tenant eligibility. Maximum allowable rents are generally calculated as 30% of the applicable MTSP income limit, based on imputed household size. HUD publishes income limits applicable to public housing, Section 8, Section 202, Section 811, Section 221(d)(3), Section 236, and Multifamily Tax Subsidy Project (“MTSP”) properties. The new income limits are effective immediately, and any decreases must be implemented no later than June 15, 2026.

For affordable housing professionals, understanding the nuances embedded within these updates, including applicable caps and potential eligibility for HERA Special income limits, is essential for maintaining compliance and ensuring continued access to funding opportunities. If you have questions about how the 2026 Income Limits impact your affordable housing projects, or if you are seeking legal guidance on affordable housing regulations, programs, and incentives, please contact the Affordable Housing and Tax Credits Team at Nelson Mullins.