If you have a low income, you may receive special benefits, such as tax breaks, cheaper rent or public assistance. The definition of low income, however, varies based on the program to which you are applying. Program administrators may calculate low income limits in various ways based on national poverty levels, the median income in the region or specific dollar limits.
Federal Poverty Level
The federal poverty level establishes an income threshold to identify low-income families in the United States. For 2013, the federal poverty level for a three-person family is $19,530. This amount increases or decreases based on family size. You may qualify for some programs only if your family's earnings fall below the federal poverty level, while other programs may allow you to qualify if you earn 1.5 to two times the federal poverty level.
Regional Income Data
Some programs are only available to individuals whose income qualifies as low or moderate in a specific region. For example, if you apply for a U.S. Department of Agriculture loan, you may need to prove that your income is no more than 115 percent of the median income in your area. For the Section 8 Housing Choice Voucher Program, your income cannot exceed 50 percent of the median income in the area, and those whose income is less than 30 percent of the area's median income receive preference.
Some programs determine low income based on set dollar limits, which are often very different from the federal poverty level or median income in the area. For example, to receive temporary financial assistance from the state of Indiana, a family of three must earn no more than $592 per month in gross income, which is much less than the national poverty level.
Many programs recalculate their low-income thresholds each year based on changes in the federal poverty level, local median incomes and cost of living. If your low income qualifies you for assistance from a certain program, you may no longer qualify if your income rises beyond the threshold or if your family size decreases. Alternatively, adding another member to your family typically increases your low-income threshold, which may allow you to qualify for additional assistance.
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