HUD’s 2024 Income Limits for Section 8, Tax Programs Include New Cap on Annual Increases

Today, the U.S. Department of Housing and Urban Development (HUD) published 2024 income limits for a variety of HUD housing programs, including public housing, project-based rental assistance, Housing Choice Vouchers, Section 202 housing for the elderly, and Section 811 housing for persons with disabilities; Multifamily Tax Subsidy Projects (MTSPs) — specifically the Housing Credit and Multifamily Bond programs; and the Homeowner Assistance Fund. Income limits determine the top-most income level for households eligible to receive HUD rental assistance or to live in a property financed by any of these programs. In the case of the Housing Credit and Multifamily Bond programs, the income limits directly impact the rents owners may charge, as maximum rents are set at 30 percent of designated income limits by unit.

Beginning in 2009, HUD has restricted annual income limit growth by allowing increases only up to the greater of five percent or two times the percentage change in national median family income. This year, HUD instituted an overall 10 percent limit on increases, which it is calling a  “cap-on-cap.” Specifically, the income limit in any given area can go up no more than 10 percent, even if the change in the national median family income would otherwise result in an increase above that amount. This means that for Housing Credit or Multifamily Bond-financed properties, rent increases also would be limited to no more than 10 percent. According to HUD, the new methodology impacts the income limits in 21 percent of areas across the nation.

HUD initially announced its intention to implement the cap-on-cap in a notice published in the Federal Register in January, in which it requested comments on the proposed change. NCSHA generally supported the cap, arguing that it would ease the financial strain on low-income tenants who might otherwise face rent increases in excess of 10 percent and noting that underwriters typically assume rent growth in the range of two to three percent per year. However, NCSHA also encouraged HUD to explore the impact of recent development and operating cost increases on project viability and to consider whether adjustments to its methodology may be necessary in the future for project viability. Some other organizations opposed the cap, arguing that fewer tenants would qualify, it would create a disincentive for developers to participate in the Housing Credit program, and properties may not be able to generate sufficient rent to cover expenses. After HUD released the new income limits, several organizations representing owners, developers, and Realtors® issued a statement opposing the methodology change. Conversely, tenant advocates applauded the administration, maintaining that the change would prevent egregious rent increases.

The HUD program income limits (not the MTSP limits) also set eligibility for Mortgage Revenue Bonds (MRBs) and Mortgage Credit Certificates (MCCs). IRS Revenue Procedure 2021-19 directs MRB/MCC issuers to use either the current year or previous year’s limits for these programs. Issuers currently using the income limits from 2022 will now have 90 days to transition to either the 2023 or 2024 income limits.

The new income limits for both HUD programs and MTSPs are effective as of yesterday, April 1. The HOME Investment Partnerships (HOME) program adheres to HOME-specific income limits, which HUD typically publishes sometime after the income limits for other HUD programs and MTSPs. HUD tells NCSHA it will publish the 2024 HOME income limits later this month, to be effective June 1.