How Section 8 rent is calculated: formula and example

The short version

Section 8 splits the rent between you and the housing agency:

1. The agency calculates your total tenant payment (TTP)—what the program expects your household to contribute toward rent and utilities.
2. It compares the unit’s gross rent (contract rent plus a utility allowance for utilities you pay) with the local payment standard for your voucher size.
3. It pays the owner a housing assistance payment (HAP). You pay the rest of the rent to the landlord and pay your own utility bills.

Everything below explains those three steps and shows how to check the numbers yourself. Use our voucher rent calculator with the agency’s income worksheet figures. Its estimate helps you check the math; the housing agency determines your official payment.

Step 1: Annual income

The agency adds up the income of every adult household member, plus any unearned income received on behalf of children (such as child support or Social Security survivor benefits). Earnings of minors, foster-care payments, SNAP, and many other items are excluded. Our eligibility guide lists what counts.

Step 2: Adjusted income (deductions)

Adjusted income is annual income minus these mandatory deductions. The amounts below are the 2026 figures under the HOTMA rules that HUD requires most agencies to follow by January 1, 2027; agencies still using the older rules use $480 per dependent and $400 for an elderly or disabled family, with a 3% medical threshold.

Medical thresholds and hardship: transition relief and hardship deductions have separate eligibility tests. Do not deduct medical expenses solely because you paid them. Ask your agency which rules and threshold apply to your household, what expenses qualify, and what evidence it needs. HUD’s PIH 2026-15 implementation notice explains the current transition; the calendar-year deduction values may also change before your next review.

Agencies can also adopt optional deductions, and agencies in the Moving to Work demonstration may use very different rent formulas (such as flat tiers or stepped rents). If your agency is an MTW agency, ask for its rent policy.

Step 3: Total tenant payment

Your TTP is the highest of:

• 30% of monthly adjusted income
• 10% of monthly gross income
• The welfare rent (applies only in a few “as-paid” states)
• The agency’s minimum rent, which may be anywhere from $0 to $50

For most households, 30% of adjusted income wins. The 10% test matters mainly for households with large deductions; the minimum rent matters for households with very low or no income.

Minimum-rent hardship

If you cannot pay the minimum rent, the agency must grant a hardship exemption when, for example, you lost eligibility for or are waiting on public assistance, you would be evicted because you cannot pay, your income dropped because of changed circumstances such as job loss, or there was a death in the family. For a voucher household requesting a minimum-rent hardship exemption, the minimum-rent suspension starts in the month following the request while the agency determines eligibility. Other parts of the rent formula can still produce a tenant payment; a minimum-rent exemption does not automatically make rent zero.

Step 4: Payment standard and gross rent

The payment standard is set by your housing agency for each bedroom size, usually between 90% and 110% of HUD’s Fair Market Rent (FMR) for the area. Some metro areas use ZIP-code-level Small Area FMRs, so the standard can differ by neighborhood. See our guide to payment standards and Fair Market Rents.

The agency uses the payment standard for the smaller of your voucher size or the unit’s actual bedroom count. A family with a two-bedroom voucher that rents a one-bedroom unit gets the one-bedroom payment standard. A family that rents a larger unit than its voucher size gets the voucher-size standard.

Gross rent = contract rent to owner + utility allowance for any utilities and appliances the tenant must supply (electricity, gas, heating oil, water, sewer, trash, a refrigerator or range, and so on).

Step 5: The subsidy and your share

• Total housing assistance = the lower of (payment standard or gross rent) − TTP, with a floor of zero
• Family share = gross rent − total housing assistance
• Agency payment to owner = the lower of total housing assistance or contract rent
• Rent you pay the owner = contract rent − agency payment to owner
• Utility reimbursement = any total housing assistance left after paying the contract rent

The family share includes the utility allowance. You still owe your actual utility bills, which can differ from that allowance. A utility reimbursement may go to you or the utility provider. These formulas describe standard tenant-based vouchers; special programs and prorated assistance require additional rules.

A worked example

This example uses round, hypothetical numbers. Your agency’s payment standards and utility allowances will differ.

Household: a parent working part time and one child, age 7. Gross income: $1,800 per month ($21,600 per year). No childcare costs.

The unit: two-bedroom apartment. Contract rent $1,400. The tenant pays electricity and gas; utility allowance $150. Gross rent = $1,550. The agency’s two-bedroom payment standard is $1,500.

The family pays $428 to the landlord plus its own electricity and gas bills. Because the gross rent is $50 above the payment standard, the family pays $50 more than its TTP would otherwise require. If the landlord had asked $1,650 contract rent (gross rent $1,800), the family share would have been $828—above the $703 limit—so the agency could not approve the unit at that rent.

The 40% rule at move-in

When you move into a new unit (or sign the first HAP contract for a unit you already live in), your family share cannot exceed 40% of your monthly adjusted income if the gross rent is above the payment standard. The rule protects you from taking on an unaffordable unit. It applies only at initial occupancy; later rent increases can push your share higher, which is one reason to budget carefully when choosing a unit near the limit.

Rent reasonableness

Separately from the payment standard, the agency must decide that the proposed rent is reasonable compared with similar unassisted units in the area, considering location, size, type, quality, age, amenities, and services. A rent below the payment standard can still be rejected as unreasonable, and the agency must re-check reasonableness before approving any rent increase.

When the numbers change

Your share is recalculated:

• At annual reexamination. New income, deductions, payment standard, and utility allowance are applied. If the payment standard increased, the agency must apply the higher amount no later than your next reexamination, a rent increase that would raise your share, or one year after the increase—whichever comes first. If it decreased, the agency may keep using your old, higher standard as long as you stay in the unit; if it does reduce it, the reduction cannot apply until at least two years after the decrease and only after 12 months’ written notice to you.
• At interim reexaminations. Under HOTMA rules, the agency must process a decrease in income of 10% or more of annual adjusted income when you report it (agencies may choose a lower threshold). Increases of 10% or more are generally processed, but increases in earned income usually wait until the next annual review unless you had an earlier income-decrease interim that year.
• When the owner raises the rent. The owner must give the agency notice and the new rent must be reasonable. A rent above the payment standard increases your share.
• When household composition changes. Adding or removing a member can change income, deductions, and even your voucher size.

Decreases in your share generally take effect the first of the month after you report the change, so report promptly. See reporting changes and recertification.

How to check your agency’s calculation

1. Ask for a copy of your most recent HUD-50058 or the rent calculation worksheet.
2. Verify each income source and amount against your own records.
3. Confirm every deduction you qualify for is listed—especially dependents, the elderly/disabled deduction, childcare, and medical expenses.
4. Check the payment standard and utility allowance used against the agency’s current schedules (these are public).
5. Recompute using the formula above.
6. If you find an error, ask in writing for a correction. Participants have the right to request an informal hearing on the agency’s determination of family income or rent.

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