Who is affected and how:

• Veterans receiving service‑connected disability compensation: They are the primary beneficiaries — those payments must not be counted as income when determining low‑ or moderate‑income status. That exclusion can increase the likelihood that eligible veterans (and their households) qualify for programs and benefits that use those income thresholds.

• Low‑ and moderate‑income households and underserved communities: Because veterans households with VA disability pay may now show lower counted income, more households could meet low/moderate income tests used by jurisdictions for housing and community development programs. This can change program outreach, eligibility, and resource targeting at the local level.

• States, units of general local government, and Indian tribes: These entities must change their income‑calculation rules and administrative systems to exclude VA service‑connected disability compensation when making determinations. That may require updates to intake forms, verification procedures, program guidance, and staff training.

• HUD programs and grantees: Programs that rely on low/moderate income determinations may see shifts in eligibility counts and need to reconcile existing rules or guidance with the new statutory exclusion. The GAO report may identify program rules that conflict and prompt legislative or administrative fixes.

• Federal oversight (GAO/Congress): The required GAO report will inform Congress about inconsistencies and recommended legislative changes, potentially prompting additional statutory amendments to align all HUD programs with the exclusion.

Net effects and tradeoffs:

• The change likely increases access for eligible veterans without creating direct new payments, but it may shift how limited program resources are allocated (more eligible households).
• Administrative costs to update eligibility systems and processes fall on State/local governments and tribes; no new federal funding is provided in the text. The GAO study could lead to additional legislative or administrative action to resolve inconsistencies across HUD programs.