If a family includes a member with a disability, that family member’s income may be excluded from the rent calculation under three circumstances: (1) the disabled family member was previously unemployed for at least one year; (2) the disabled family member’s earnings increased as a result of an economic self-sufficiency or other job training program; or (3) the disabled family member’s earnings increased during or within six months after receiving assistance or services from any state program for temporary assistance for needy families funded under Part A of Title IV of the Social Security Act.1 This is typically called the “earned income disallowance.”
Under this provision, for the first 12-month period, the increase of income is wholly disallowed in the rent calculation.2 If the family began receiving the benefits of the disability disallowance prior to May 9, 2016, 50% of the earnings of the disabled family member are excluded following the initial 12-month period.3 Otherwise, the 50% disallowance is only available for an additional 12 months; in this case, there is a lifetime maximum disallowance of 24 months.4
Note that on January 1, 2024, certain changes go into effect pursuant to the Housing Opportunity Through Modernization Act (HOTMA). Under the new rules, the earned income disallowance (also known as earned income disregard) is being phased out from 2024-2026.