The U.S. Department of Housing and Urban Development (HUD) released the 2025 income limits for Section 8 and other affordable housing programs. Here’s what renters, property managers, and housing advocates need to know.
What Are the 2025 HUD Income Limits?
Each year, HUD sets income thresholds to determine eligibility for federal housing assistance, including Section 8 vouchers and Low-Income Housing Tax Credit (LIHTC) properties. The 2025 income limits, released April 1, show a national average increase of 6.2%, significantly above prior estimates.
- 41% of areas saw income limits rise more than 8%
- 71% saw increases above 5%
- 27% of areas hit the maximum cap of 9.2%
- 5% of areas experienced a decrease
These changes directly affect who qualifies for affordable housing and how much rent can be charged under HUD guidelines.
Why Were the 2025 Income Limits So High?
Experts had predicted a modest 3.2% rise based on inflation forecasts, but HUD’s shift in methodology changed everything.
Key Change: New Inflation Factor
Previously, HUD used the Consumer Price Index (CPI) to project income growth. Starting in 2025, it now uses per capita wage and salary data, which led to higher income limit adjustments.
Example Comparison:
| Method | Median Income | 50% Very Low Income (VLI) |
|---|---|---|
| Old (CPI) | $100,000 | $52,300 |
| New (Wage-Based) | $100,000 | $54,000 |
In real terms, this meant Milwaukee’s income limit rose 8.42% using the new method, versus 5% under the old system.
Understanding the Cap on Increases
HUD limits annual increases in income limits to maintain consistency and prevent sudden eligibility changes. For 2025:
- The cap is 9.2%, based on a 4.6% rise in national median income from the 2022 to 2023 ACS data.
- 27% of areas hit this cap. Without it, the average increase would’ve been 7.47%.
- In capped regions, income limits would’ve surged 14% on average without the restriction.
What About Area Redefinitions?
HUD also updated its metropolitan area definitions in 2025, adopting the OMB Bulletin No. 23-01 standards. This led to significant boundary changes, especially in Connecticut:
- 42 new HUD-defined areas were created in Connecticut alone.
- 10 of those areas saw increases over 9%
- 17 experienced decreases of 5%
Though the average impact across all new areas was only 1%, individual towns saw major eligibility shifts.
What Data Was Used to Set 2025 Limits?
HUD based the 2025 income limits on 2023 American Community Survey (ACS) data, then adjusted using its new trend factor (per capita wage growth). This approach reflects broader economic patterns, rather than just inflation.
It’s worth noting that HERA Special Income Limits are not subject to the cap, so some areas may see changes above 10%.
Key Takeaways for Tenants and Property Managers
- Eligibility thresholds have increased in most areas, potentially allowing more households to qualify.
- Higher income limits can raise rent ceilings for LIHTC properties.
- The new methodology is here to stay—HUD has stated it will use per capita wage and salary data going forward.
To stay updated or explore your area’s specific limits, HUD tools and calculators (like those offered by Novogradac) are being updated with 2025 data.
What to Do Next
With income limit changes now official:
- Check your area’s new thresholds using HUD’s Income Limit Calculator.
- Property managers should prepare for compliance updates.
- Tenants should recheck eligibility based on updated thresholds.
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