What Is Considered Low Income in North Carolina?

Understanding what constitutes “low income” in North Carolina is important for individuals seeking assistance and for organizations providing support. Low income is a dynamic concept defined by various federal and local entities. These definitions are crucial because they determine eligibility for a wide array of programs and services, ranging from housing assistance to healthcare. Different agencies and programs utilize distinct methodologies and thresholds to assess a household’s financial standing. This article will clarify the primary definitions and factors that influence how low-income status is determined in North Carolina.

Federal Poverty Guidelines and Their Application in North Carolina

The Federal Poverty Guidelines (FPG) are national income thresholds issued annually by the Department of Health and Human Services (HHS). These guidelines serve as a baseline for determining financial eligibility for many federal and state programs. While they provide a uniform standard, they do not account for variations in the cost of living across different regions.

North Carolina agencies and programs frequently adopt the FPG directly or use them as a percentage multiplier to set their income eligibility limits. For instance, some programs may consider households with incomes at 125%, 150%, or even 200% of the FPG as low-income. The Weatherization Assistance Program in North Carolina, for example, serves families with incomes below 200 percent of the federal poverty guidelines.

For 2024, the Federal Poverty Guidelines for the 48 contiguous states, including North Carolina, are as follows:
For a household of 1 person: $15,060
For a household of 2 persons: $20,440
For a household of 3 persons: $25,820
For a household of 4 persons: $31,200

For households larger than four people, an additional $5,380 is added for each additional person. These figures are updated annually.

Area Median Income and Its Use in North Carolina

Area Median Income (AMI) is another significant measure used to define income levels, differing from the FPG by reflecting local economic conditions. The Department of Housing and Urban Development (HUD) establishes AMI figures annually for metropolitan areas and non-metropolitan counties. AMI represents the midpoint of a region’s income distribution, meaning half the households in that area earn more, and half earn less.

In North Carolina, AMI is primarily utilized for housing assistance programs, but it also plays a role in various community development initiatives. Eligibility for these programs is often categorized based on percentages of the AMI. Households earning up to 80% of the AMI are classified as “low-income.” Those earning up to 50% of AMI are considered “very low-income,” and households earning up to 30% of AMI are designated as “extremely low-income.”

The variability of AMI across North Carolina highlights its importance in reflecting local costs. For example, in the Durham-Chapel Hill HUD Metro FMR Area for FY 2024, the AMI for a four-person household is $105,900. This translates to an extremely low-income limit of $31,750, a very low-income limit of $52,950, and a low-income limit of $84,700 for a four-person household. In contrast, for the Charlotte-Concord-Gastonia HUD Metro FMR Area in FY 2024, the low-income limit for a four-person household is $84,800. For a rural area like Anson County, the low-income limit for a four-person household in FY 2024 is $58,650.

Factors Influencing Low Income Status

Determining low-income status involves more than just comparing a household’s earnings to a single threshold; several factors can significantly influence this classification. The number of individuals within a household is a primary consideration, as both Federal Poverty Guidelines and Area Median Income thresholds are adjusted based on household size. A larger household requires a higher income to meet the same relative standard of living. For instance, the income limit for a household of four will be considerably higher than that for a single individual to qualify as low-income.

Geographic location also influences low-income status, as Area Median Income figures vary across North Carolina’s counties and metropolitan areas. An income considered low in a high-cost urban center might not be classified as low in a rural, lower-cost region.

Beyond these broad federal and regional guidelines, specific program requirements can introduce further variations. While many programs use FPG or AMI as a foundation, they may have their own unique income thresholds, which could be specific percentages of these guidelines or entirely separate calculations. Some programs might also include additional criteria beyond income, such as assets or specific demographic characteristics, to determine eligibility. It is important to consult the guidelines of the specific program for accurate information.

Understanding Income Calculation

When determining low-income status for eligibility purposes, various types of income are considered. This usually includes gross income, which is the total amount earned before taxes, deductions, or other withholdings are applied.

Included Income Sources

Common sources of income counted in this calculation include:
Wages, salaries, and tips from employment.
Income from self-employment.
Social Security benefits, including Social Security Disability Income (SSDI).
Pension or retirement income.
Investment income.
Rental and royalty income.
Unemployment compensation.
Alimony received from divorces finalized before January 1, 2019.

Excluded Income Sources

Conversely, certain types of income are commonly excluded from these calculations to prevent penalizing individuals for receiving specific forms of assistance or non-recurring payments. Examples of excluded income often include:
Child support payments.
Gifts.
Proceeds from loans such as student loans or bank loans.
Specific public assistance benefits, such as those from the Low-Income Home Energy Assistance Program (LIHEAP).
Certain disaster assistance payments.
Tax refunds, including those from the Earned Income Tax Credit, for a period, often 12 months, after receipt.

While gross income is generally the basis for determining eligibility, specific programs might have slightly different rules regarding what counts as income or how it is calculated. For instance, Supplemental Security Income (SSI) has its own distinct rules for income counting, which differ from other benefit programs.