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HUD to Publish Notice Changing Calculation of Income Limit Cap; Sets Annual Maximum Increase at 10%

Tuesday, January 9, 2024 - 9:07AM

The U.S. Department of Housing and Urban Development (HUD) will publish a notice in Wednesday’s Federal Register setting an absolute annual cap of 10% on income limit increases for housing financed by low-income housing tax credits (LIHTCs), private-activity bonds (PABs) and for various HUD programs, including Section 8. Previously, the cap was 5% or twice the annual percentage change in median family income. This also establishes a cap of 10% on rent limit increase for LIHTCs and PABs. The notice also solidifies HUD’s recent policy to calculate the cap–which changed two years ago–as “using the most recent unadjusted estimates of median family income provided by the Census Bureau via the ACS.” That means HUD will calculate fiscal year (FY) 2024 income limit caps based on the change in national family median income from 2021 to 2022. Novogradac previously calculated that if HUD used the same methodology as in 2022 and 2023, the 2024 cap would be 14.78%–a figure that can now be no higher than 10%. Comments on the notice will be accepted through Feb. 9, but HUD requests that comments are limited to six questions.

The Income Limits Working Group will discuss the issue and respond to the proposed change.

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