State Median Income Estimates for 2021 and 2022
The release of the 2019 American Community Survey (ACS) data provides an initial sneak peek at income limits for 2022. Using the ACS and the Congressional Budget Office’s (CBO) consumer price index (CPI) estimate, Novogradac can provide initial estimate area median income and very-low income for 2021 and 2022. While we still need to wait for final CPI figures, these initial estimates provide insight into overall income limit trends.
Initial Analysis–State Median Income
As anticipated, the estimates for 2021 are heavily affected by the slowdown in the U.S. economy. As mentioned above, one of the driving factors in HUD’s calculation of income limits is CPI. Although the general trend is a slowing down of income-limit increases in 2021, there are a few states that are bucking this trend and having large increases. Unfortunately, there are a few states that are estimated to have a decrease in state median income from 2020 to 2021.
However, using CBO’s July estimate of CPI, it appears that 2022 will be a rebound year for income limits. Currently Novogradac estimates that the national median income will increase by more than 5.75%.
State Median Income
The chart below shows the estimate and changes in state median income for 2020-2023. The year 2022 stands out as an outlier compared to the other years. Almost 25% of all states will have a decrease in state median income in 2021, as compared to five states in 2020 and zero states in 2023. There are still a few bright spots in 2021, with District of Columbia and Vermont both increasing by greater than 5%.
It looks like 2022 will be a rebound year for state median incomes. It is estimated that all states will have an increase, with around 70% of the states having an increase of more than 5%. Although individual areas in states can go against the trend for the rest of the state, generally speaking, the overall increase in state median income means that areas in that state are more likely to see increases in their median incomes. Individual area estimates will be covered in part three of this series.
The next two years will see a lot of volatility in income limits. It is important to understand how income will change for your specific area. Estimates for individual areas can be ordered here.