Has the Income Threshold Edit Gone Away For 2024-25 and Beyond?

Yes. According to guidance NASFAA received from the U.S. Department of Education (ED), the income threshold FAFSA edit and comment code are no longer in place starting with the 2024-25 award year.

Per ED, income earned from work is being imported from a filed tax return and has a different use in the student aid index (SAI) calculation than it did for the expected family contribution (EFC) calculation. Also, a FAFSA applicant who has not filed a U.S. tax return is being treated as “not being required to file” for both the SAI formula and the Federal Pell Grant eligibility formula. For these reasons, there is no field for a nontax filer to enter income earned from work and thus no threshold to check against to trigger the current comment code to determine whether an applicant was required to file.

However, conflicting information requirements under 34 CFR 668.16(f) still exist whether or not student is selected for verification. Should a school become aware that an applicant was required to file a tax return, but did not file one, then the school would need to resolve that conflicting information. This would require a filed tax return, a written explanation from a tax expert or the IRS indicating the individual was not required to file a tax return, or some other documentation proving the individual was not required to file a tax return.

Schools should keep in mind that they cannot create additional forms for Title IV federal student aid eligibility. Therefore, the school could not create a form that they would require from all nontax fliers to report their income earned from work so that the school could then determine if the applicant was required to file a tax return. On the other hand, if the school selects the student for institutional verification of income earned from work under 668.54(a)(3), it can collect whatever documentation it deems necessary to verify that information. NASFAA encourages schools not to verify unnecessary information unless there is conflicting information.

Remember: The tax filing thresholds still apply even without an edit or comment code, but only to U.S. federal tax returns. Schools should not attempt to apply these thresholds to foreign tax returns/tax filers. See AskRegs Knowledgebase Q&A, What Are the Income Thresholds For Filing a U.S. Tax Return?