What is income restriction (LIHTC)?
Income restriction is a requirement that tenants in Low-Income Housing Tax Credit units earn no more than a specified percentage of the Area Median Income (typically 50-80% AMI) for their household size in that geographic area.
The Low-Income Housing Tax Credit (LIHTC) program uses income restrictions to ensure housing units serve households with limited earnings. These restrictions are expressed as a percentage of Area Median Income (AMI) for a given county or metropolitan area. In Greater Austin, for example, income caps vary by household size and are adjusted yearly based on HUD calculations.
Most LIHTC properties in the Austin region set income limits at 50%, 60%, or 80% AMI. A household earning more than the specified percentage threshold for its size becomes ineligible to rent that unit, even if a vacancy exists. This differs fundamentally from Section 8 vouchers, which serve households at 30% AMI and below and allow tenants to use vouchers at any participating landlord. LIHTC units, by contrast, are tied to specific properties and impose the income cap at lease signing and renewal.
Developers and property owners accept income restrictions as a condition of receiving federal tax credits, which offset construction or renovation costs. For apartment complexes in Austin, maintaining LIHTC compliance requires income verification at move-in and periodic recertification. When searching for affordable housing providers, prospective tenants should confirm the income limit of the property and provide documentation (W-2s, tax returns, or pay stubs) to establish eligibility.