Federal law generally prohibits candidates from using campaign funds for personal expenses. But under a narrow exception administered by the Federal Election Commission, certain nonincumbent federal candidates may receive compensation from their campaign committees during the course of a campaign.
The rule is intended to make federal office more accessible to candidates who otherwise would lose income by leaving employment or reducing work to campaign full-time. At the same time, the FEC has repeatedly emphasized that campaign salary is not a general living stipend and cannot become a mechanism for converting campaign funds into personal income.
That tension explains why the concept of “earned income” at times, comes into play in figuring out how the rule works in practice. The FEC’s Advisory Opinion 2021-13 has implications far beyond veterans’ disability benefits.
The General Rule: Campaign Funds Cannot Be Used for “Personal Use”
The Federal Election Campaign Act prohibits the conversion of campaign funds to “personal use.” The statute defines personal use as the use of campaign funds:
“to fulfill any commitment, obligation, or expense of a person that would exist irrespective of the candidate’s election campaign or individual’s duties as a holder of Federal office.”
FEC regulations identify a number of expenditures that are considered per se personal use unless an exception applies. Candidate salary is one of them.
Under 11 C.F.R. § 113.1(g)(6), however, a nonincumbent candidate may receive compensation from campaign funds if specific conditions are met.
The Current Candidate Salary Rule
The FEC recently revised the rule governing candidate compensation. Under the current regulation, compensation from campaign funds cannot exceed the lesser of:
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Fifty percent of the minimum annual salary paid to a Member of the U.S. House of Representatives; or
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The candidate’s average annual earned income during the five most recent calendar years in which the candidate earned income before becoming a candidate.
The regulation uses a daily-rate calculation. Because the current House salary is $174,000, the maximum salary permitted under the congressional-salary cap is approximately $238 per day.
The rule also reduces permissible campaign compensation by outside earned income received after filing a Statement of Candidacy.
The FEC explains:
Candidate salary eligibility is also time-limited. Candidates may begin receiving compensation once they file a Statement of Candidacy and may continue receiving it only until twenty days after the campaign ends.
Why “Earned Income” Matters
A key feature of the regulation is not the dollar cap. It is the requirement that compensation be tied to prior “earned income.”
That phrase is not expressly defined in the Federal Election Campaign Act or the candidate salary regulation. The absence of a definition matters because many candidates do not derive their financial support from traditional employment. Retirees, veterans, investors, business owners, trust beneficiaries, and candidates with irregular work histories may all have substantial income without having what the FEC considers “earned income.”
The FEC addressed the issue directly in Advisory Opinion 2021-13.
Advisory Opinion 2021-13: VA Disability Benefits Are Not “Earned Income”
In AO 2021-13, Marine Corps veteran Matthew Hoh asked whether VA disability benefits qualified as “earned income” for purposes of calculating candidate salary.
Hoh had been classified by the Department of Veterans Affairs as “100% disabled” and had received non-taxable VA disability benefits for several years. He also earned modest taxable employment income in 2020 and 2021.
The Commission concluded that the VA disability benefits did not qualify as earned income and therefore could not be used to calculate permissible campaign salary.
The opinion’s significance extends well beyond veterans’ benefits because it explains how the FEC understands the scope and purpose of “earned income” generally.
The FEC’s Broader Interpretation of “Earned Income”
The Commission’s reasoning rested on statutory usage, ordinary meaning, and regulatory purpose.
First, the FEC noted that the Act and regulations consistently use “earned income” alongside salary and compensation tied to employment or services rendered.
Second, the Commission relied on ordinary usage. The opinion quoted Black’s Law Dictionary defining earned income as:
“[m]oney derived from one’s own labor or active participation; earnings from services.”
The opinion also cited the Oxford English Dictionary definition:
“income derived from paid work.”
Third, the Commission focused on the purpose of the regulation itself. When the FEC originally adopted the candidate salary rule, it explained that the purpose was:
“to compensate candidates for lost income that is foregone due to becoming a candidate.”
That principle became decisive in AO 2021-13. The Commission emphasized that VA disability benefits would continue regardless of candidacy and were not compensation for current labor or services.
The Practical Scope of the Rule
AO 2021-13 strongly suggests that the FEC views earned income as compensation tied to labor, employment, or active participation, not simply any source of money available to the candidate.
Traditional wages and salary plainly qualify. Professional fees, commissions, and active self-employment income likely do as well. But the Commission’s reasoning places other categories of income on uncertain or weaker footing.
Those potentially affected categories may include:
- Disability benefits;
- Pension or retirement distributions;
- Trust income;
- Passive investment income;
- Rental income;
- Passive partnership or LLC distributions;
- Certain government benefits; and
- Other income not directly tied to current services rendered.
This is a key distinction matters because many prospective candidates: specially older candidates, veterans, caregivers, and business owners, may have substantial financial resources while having relatively little qualifying earned income under the FEC’s interpretation.
A retiree living on pension distributions and investment income, for example, may be unable to receive meaningful campaign salary despite having substantial annual income. Likewise, a candidate supported primarily through passive business ownership may face similar limitations if the income is not tied to active services.
The rule therefore does not merely limit the amount of campaign salary. In some cases, it determines whether campaign salary is permissible at all.
The Rule’s Policy Tension
The candidate salary regulation reflects competing policy goals.
On one hand, the FEC has acknowledged that campaigns impose financial burdens that may prevent otherwise qualified candidates from seeking office. The rule exists in part to reduce barriers to candidacy for individuals who cannot campaign full-time without losing income.
On the other hand, the FEC remains concerned that campaign salary can become a vehicle for personal enrichment or disguised personal use. That concern explains why the Commission repeatedly frames candidate salary as replacement income rather than general support.
The modern five-year averaging rule broadened access compared to the prior version of the regulation, which focused more narrowly on the year immediately preceding candidacy. But the revised rule still preserves the earned-income limitation as the gatekeeping mechanism.
In practical terms, the FEC appears to be drawing a line between: the income foregone because the candidate campaigns; and the income the candidate would receive regardless of candidacy.
The first category may support campaign salary. The second generally will not.
Compliance and Documentation Risks
Candidate salary remains a personal-use issue under campaign finance law, which means improper payments can create enforcement exposure.
The FEC requires candidates receiving salary from campaign funds to maintain supporting evidence of earned income, including tax records. The regulations also require retention of that documentation for three years after the relevant disclosure filing.
Campaigns therefore should analyze not only the amount of prior income, but also the character of that income.
The central compliance question is no longer simply whether the candidate had money or income before running for office. The real question is whether the income was earned through labor, employment, services, or active participation in a manner consistent with the FEC’s interpretation of the regulation.
Where the answer is unclear, campaigns should proceed cautiously. The farther income moves from traditional compensation for services rendered, the greater the risk that the FEC could view candidate salary payments as impermissible personal use.
Bottom Line
The FEC permits certain nonincumbent federal candidates to receive campaign-funded salary, but only within a tightly constrained regulatory framework tied to prior earned income.
AO 2021-13 confirms that “earned income” is not synonymous with all forms of financial support or cash flow. Instead, the FEC views the term as compensation derived from labor, employment, or active services — income that the candidate would otherwise lose by campaigning.
That interpretation has ramifications well beyond VA disability benefits. It affects retirees, passive investors, business owners, and any candidate whose finances are not primarily wage-based.
As candidate salary rules continue to evolve, the distinction between income and earned income may become an important, yet often overlooked, compliance questions in federal campaign finance law.