Income deductions for CalFresh households

Allowable deductions for all CalFresh households

As discussed in the sections about the definition of income and income limits, the net income of all households must be below the net income limit. [MPP §§ 63-503.321(a)(QR), 63-503.323(a); 7 C.F.R. § 273.9(a).]. Be mindful that, while “elderly or disabled” households are exempt from the CalFresh gross-income test, all other households still must meet that threshold gross-income limit to qualify for benefits. [MPP § 63-503.321(a)(QR); 7 C.F.R. § 273.9(a).]

With that level setting done, let’s now move on to the types of deductions the household is allowed to claim against its gross income, in order to reduce its countable income below the net-income limits and thereby qualify for benefits. Simply put, CalFresh households can deduct certain expenses from their gross income to determine their net monthly income. [MPP § 63-502.3; 7 C.F.R. § 273.9(d).] These include the following:

  • Earned income deduction: 20% is deducted from gross earned income (income from work such as salary, wages, and tips). [MPP §§ 63-502.13, 63-502.32; 7 C.F.R. §§ 273.9(d)(2), 273.10(e)(1)(i)(B).];
  • Standard deductions: Standard deduction amounts vary with the number of household members. [MPP § 63-502.31; 7 C.F.R. §§ 273.9(d)(1), 273.10(e)(1)(i)(C).] Standard deductions are 8.31% of the current net income limit for the household size. [MPP § 63-502.311(b); 7 C.F.R. § 273.9(d)(1).] It cannot be more than 8.31% of current net income limit for six persons, even if the household is larger than six persons. [MPP § 63-502.311(a).]  The standard deduction was $144 effective fiscal year 2009 and is indexed to inflation each fiscal year thereafter.  [ACL 17-98.]  Effective October 1, 2023, the standard deduction is $198 for households of 1-3 people, $208 for a four person household, $244 for a five person household and $279 for households of six or more.  [ACIN I-48-23.]
  • Dependent care deduction: CalFresh households can deduct actual costs they pay for child or other dependent care. [MPP § 63-502.34; 7 C.F.R. §§ 273.9(d)(4), 273.10(e)(1)(i)(E).] The care must be necessary for a household member to accept or continue work, comply with the requirements of the CalFresh Employment and Training (FSET) program, or attend training or education that prepares the person for work. The household, as warranted, may “self-certify” these costs. [ACL 13-102 (verification of dependent care expenses)].  There is no longer a cap on the dependant care deduction.  [ACL 17-98.] Counties must accept a client statement as the standard verification for dependent care expenses, and counties cannot seek other verification unless the information provided by the household is questionable. [ACL 20-135.]
  • Excess shelter deduction: It’s a bit convoluted to explain this deduction, but here goes: The excess shelter deduction is the monthly shelter costs that exceed 50% of the adjusted household income — i.e., income after taking other allowable deductions. [MPP § 63-502.36; 7 C.F.R. §§ 273.9(d)(6)(ii), 273.10(e)(1)(i)(H) and (I).] To determine the excess shelter deduction, add the shelter costs and the utility deduction together. [MPP § 63-502.362.] Then subtract the shelter costs from 50% of the adjusted household income. [MPP § 63-502.36; 7 C.F.R. §§ 273.9(d)(6)(ii).] Households can take this amount as an excess shelter cost deduction or the current shelter deduction maximum, whichever is less. [Id.] Households with an elderly or disabled member can deduct the full amount. [Id.] Effective October 2023, the maximum shelter deduction is $672, except for households with an elderly or disabled member who have no maximum. [ACIN I-48-23.]  Counties must accept shelter costs reported by a CalFresh applicant or recipient on a signed application, periodic report or recertification.  [Welf. & Inst. Code § 18901.15; ACL 19-86.] Counties cannot request additional verification unless the expenses reported are questionable.  [Id.] To be considered questionable, information reported must be inconsistent with statements made by the applicant or inconsistent with other information received by the county.  [Id.]
  • Medical expense deduction:  Households with at least one “elderly” or “disabled” person can deduct non-reimbursed medical costs over $35 a month.  [See Medical Expense Deduction.]
  • Standard Utility Allowance (SUA): The standard utility allowance (SUA) is a fixed amount adjusted annually by CDSS, for households that have heating or cooling costs separate from their rent or mortgage payments. [MPP § 63-502.363(a)(1) and (b); 7 C.F.R. § 273.9(d)(6)(iii)(C).] The SUA is not pro-rated for shared living situations or living with excluded household members. [MPP § 63-502.371 and 63-502.372.]  Effective October 1, 2023, the SUA is $596. [ACIN I-48-23.]
  • Limited Utility Allowance (LUA): A household that is not eligible for the SUA but has expenses for at least two separate types of utilities (other than heating and cooling) can claim a limited utility allowance (LUA), which is adjusted annually by CDSS. [MPP § 63-502.363(d); 7 C.F.R. § 273.9(d)(6)(iii)(A).] Utilities expenses for which the household can claim the LUA are telephone, water, sewerage, and trash collection. [Id.]  Effective October 1, 2023, the LUA is $158.  [ACIN I-48-23.]
  • Telephone Utility Allowance (TUA): A household that is not eligible for either the SUA or LUA but has telephone expenses can claim a telephone allowance (TUA) of $19. [MPP § 63-503.362(e), [ACIN I-48-23.]
  • Only households that have telephones or equivalent forms of communication can claim the TUA. [Id.]
  • Homeless shelter deduction: Homeless households can claim the homeless shelter deduction per month, if they pay for some shelter during a month. [MPP § 63-502.351; 7 C.F.R. §§ 273.9(d)(6)(i), 273.10(e)(1)(i)(G).] All homeless households that incur, or reasonably expect to incur, shelter costs during a month are eligible to use the deduction without verifying the shelter costs. [MPP § 63-502.353.] The households can claim a higher shelter deduction if they can verify higher shelter costs. [MPP § 63-502.353; 7 C.F.R. § 273.9(d)(6)(i).] Effective October 1, 2023, the homeless shelter deduction in California is $179.66. [ACIN I-60-22.]
  • Starting for Fiscal Year 2020, the homeless shelter deduction will be indexed to inflation.  [ACL 19-38.]
  • Child support payments made by a household member to someone not in the household.   California has exercise the federal option that child support payments made by a household member to someone not in the household are an income deduction.  [See Child support payments made by a household member to someone not in the household.]

Note that income deductions cannot be granted retroactively.  Any deductions which are not requested or verified on the SAR-7, recertification or in the month there is a change in expense amount are lost.  [MPP § 63-504.34.]

How the “Heat & Eat” LIHEAP program affects the choice of deductions by the homeless

With implementation of the “Heat and Eat” LIHEAP program, most homeless households will likely just take the full Standard Utility Allowance (SUA) rather than the homeless shelter deduction. [See, generally, ACL 13-35.] However, some households, even though they have income over a certain amount, are disadvantaged by application of the SUA. ACL 13-35 requires counties to calculate whether the homeless shelter deduction or the SUA would be more beneficial to the household and then provide the household he most favorable deduction.

All households who would get additional benefits if the SUA were used will get a LIHEAP energy benefit. This benefit in turn will qualify them for the SUA. [ACL 14-66.] This is because the county has verification that the LIHEAP benefitLs were issued, which by law qualifies the household for the SUA: Households receiving energy assistance payments made under the LIHEAP program can claim the SUA. [MPP § 63-502.363(a)(2); 7 C.F.R. § 273.9(d)(6)(iii)(C); ACL 13-35.] Households receiving energy assistance vendor payments made under other programs are eligible for the SUA only if they continue to pay out-of-pocket heating or cooling expenses during any month covered by the certification period. [Id.]

Special deduction for households with an “elderly and disabled” member

Excess medical expense deduction: A household with at least one elderly or disabled household member with that member’s non-reimbursed medical expenses over $35 can deduct $120 for the standard medical deduction or actual medical expenses if more than $155 per month. [MPP § 63-502.33; 7 C.F.R. §§ 273.9(d)(3), 273.10(e)(1)(i)(D).] See the section about medical expense deductions for more detailed information.

Nonhousehold members

If the CalFresh eligible household member(s) lives with and shares allowable shelter or dependent care expenses with the nonhousehold member, contributions to those expenses from the nonhousehold member are deducted from the expense and the net amount is the allowable deduction.  [MPP § 63-503.452.] If the contribution from the nonhousehold member cannot be differentiated, the pro rata share of the shelter expense for the household members is used to determine the allowable deduction.  [Id.]