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Defining Income

There is no federal definition of income; as a result, states may develop their own definitions of income, as well as develop their own timeframes for counting income. In defining and counting income, states generally take into account these four factors:

  • Countable (base) income, including but not limited to, wages, salaries and tips; or means-tested benefits such as SSI, Social Security and veteran's benefits
  • Non-countable or excluded income, including but not limited to, the value of SNAP benefits or benefits from certain other federal programs, or cash income over which the household has no control.
  • Income deductions (what will be subtracted from income), such as medical expenses
  • Time period to be used for counting income

In counting income, common grantee practices include:

  • Count gross income of all household members; allow deductions or exclusions per grantee's policy. States choose to count gross income instead of net income for administrative efficiency, i.e., determining net income for each household would take more time due to consideration of a variety of potential deductions. Furthermore, the LIHEAP federal household report requires states to report household gross income.
  • Count net income only from self-employment or for Social Security income with Medicare deduction.

Regarding counting of gross income versus net income, the following guidance comes from the Division of Energy Assistance FAQs on its website:

"Generally, income means gross income, but a number of states have deductions for medical expenses over a certain level, or for some limited expenses associated with employment such as child care. If a state is going to exempt taxes or go beyond the medical and employment expense, we should look at it with the grantee before it acts.

...Using gross income is a generally accepted (though not required) practice in many programs, including the LIHEAP program. Total gross income provides a 'base' from which to evaluate a potentially eligible household in the fairest way possible, relative to other potentially eligible households. In addition, many LIHEAP grantees count the receipt of child support payments as income, and that amount is included in the income total when determining a household's income eligibility for LIHEAP benefits."

See examples from Minnesota,
Florida, Oregon, and North Dakota on how income is counted.