This rule amends HUD's regulations for the definition of ``annual income'' applicable to Public Housing Agencies and Indian Housing Authorities (collectively called Housing Agencies or HAs) in the operation of public housing and Indian housing programs. The change is not applicable to the Section 8 Housing Assistance Payments program. The rule is necessary to encourage HAs to take action to further the efforts of applicants and tenants to seek employment and to increase their earned income. The intended effect is to permit HAs to adopt an exclusion for earned income, tailored to their own circumstances, to support the efforts of working families.