diff --git a/changelog_entry.yaml b/changelog_entry.yaml
index e69de29bb2d..036a3b017cd 100644
--- a/changelog_entry.yaml
+++ b/changelog_entry.yaml
@@ -0,0 +1,6 @@
+- bump: patch
+  changes:
+    fixed:
+      - Fix IL HBWD earned income exemptions to apply only to disabled/blind persons.
+    added:
+      - Add is_blind to IL HBWD disability eligibility check.
diff --git a/policyengine_us/parameters/gov/states/il/hfs/hbwd/eligibility/income/sources/earned.yaml b/policyengine_us/parameters/gov/states/il/hfs/hbwd/eligibility/income/sources/earned.yaml
index c85701edad1..a37c739cbb5 100644
--- a/policyengine_us/parameters/gov/states/il/hfs/hbwd/eligibility/income/sources/earned.yaml
+++ b/policyengine_us/parameters/gov/states/il/hfs/hbwd/eligibility/income/sources/earned.yaml
@@ -3,6 +3,7 @@ values:
   2022-04-01:
     - employment_income
     - self_employment_income
+    - rental_income
 
 metadata:
   unit: list
diff --git a/policyengine_us/tests/policy/baseline/gov/states/il/hfs/hbwd/eligibility/il_hbwd_income_eligible.yaml b/policyengine_us/tests/policy/baseline/gov/states/il/hfs/hbwd/eligibility/il_hbwd_income_eligible.yaml
index 15edc7cb0f2..8673cfe114a 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/il/hfs/hbwd/eligibility/il_hbwd_income_eligible.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/il/hfs/hbwd/eligibility/il_hbwd_income_eligible.yaml
@@ -2,6 +2,7 @@
   period: 2024-01
   input:
     state_code: IL
+    is_disabled: true
     employment_income: 36_000  # $3,000/month
     social_security: 12_000  # $1,000/month
   output:
@@ -11,6 +12,7 @@
   period: 2024-01
   input:
     state_code: IL
+    is_disabled: true
     employment_income: 52_716  # $4,393/month
   output:
     il_hbwd_income_eligible: true
@@ -19,7 +21,31 @@
   period: 2024-01
   input:
     state_code: IL
+    is_disabled: true
     employment_income: 60_000  # $5,000/month
   output:
     il_hbwd_income_eligible: true
     # Gross $5,000, after expenses and exemptions becomes eligible
+
+- name: Case 4, income too high even with exemptions.
+  period: 2024-01
+  input:
+    state_code: IL
+    is_disabled: true
+    employment_income: 72_000  # $6,000/month
+  output:
+    il_hbwd_income_eligible: false
+    # 350% FPL for single (2024) = ~$4,393/month
+    # Gross $6,000, even after exemptions exceeds limit
+
+- name: Case 5, not disabled so no exemptions and income too high.
+  period: 2024-01
+  input:
+    state_code: IL
+    is_disabled: false
+    employment_income: 60_000  # $5,000/month
+  output:
+    il_hbwd_income_eligible: false
+    # Non-disabled person uses gross income (no exemptions)
+    # Gross $5,000 > limit $4,393 → NOT eligible
+    # (Same income as Case 3, but without exemptions)
diff --git a/policyengine_us/tests/policy/baseline/gov/states/il/hfs/hbwd/income/earned/il_hbwd_countable_earned_income.yaml b/policyengine_us/tests/policy/baseline/gov/states/il/hfs/hbwd/income/earned/il_hbwd_countable_earned_income.yaml
new file mode 100644
index 00000000000..d15cea7883e
--- /dev/null
+++ b/policyengine_us/tests/policy/baseline/gov/states/il/hfs/hbwd/income/earned/il_hbwd_countable_earned_income.yaml
@@ -0,0 +1,292 @@
+# Test HBWD earned income exemption handling
+# Per § 120.510(i), exemptions apply only to disabled/blind persons.
+# Non-disabled/non-blind persons use gross income (no exemptions).
+# If spouse is disabled/blind, they also get exemptions.
+
+# Test 1: Disabled worker gets earned income exemptions
+- name: Case 1, disabled worker gets earned income exemptions.
+  period: 2025-01
+  absolute_error_margin: 0.5
+  input:
+    age: 49
+    is_disabled: true
+    is_blind: false
+    il_aabd_gross_earned_income: 125
+    il_aabd_expense_exemption_person: 0
+    il_aabd_gross_unearned_income: 0
+    state_code: IL
+  output:
+    # Disabled worker gets exemptions: 125 - 25(flat) - 20 - 30(50% of 60) = 50
+    il_hbwd_countable_earned_income: 50
+
+# Test 2: Non-disabled, non-blind person uses gross income (no exemptions)
+- name: Case 2, non-disabled person uses gross income.
+  period: 2025-01
+  absolute_error_margin: 0.5
+  input:
+    age: 47
+    is_disabled: false
+    is_blind: false
+    il_aabd_gross_earned_income: 125
+    il_aabd_expense_exemption_person: 0
+    il_aabd_gross_unearned_income: 0
+    state_code: IL
+  output:
+    # Non-disabled, non-blind person: uses il_hbwd_gross_earned_income (not set here, so 0)
+    # In real scenarios, employment_income flows to il_hbwd_gross_earned_income
+    il_hbwd_countable_earned_income: 0
+
+# Test 3: Scenario 15 - Married couple over income limit correctly shows ineligible
+# person1: Age 49, disabled, $4,500/month wages ($54,000/year)
+# person2: Age 47, NOT disabled/blind, $2,500/month wages ($30,000/year)
+# Combined gross income: $7,000/month
+# 350% FPL for 2 people = $6,168.75/month
+- name: Case 3, married couple over income limit correctly shows ineligible.
+  period: 2025-01
+  absolute_error_margin: 0.3
+  input:
+    people:
+      person1:
+        age: 49
+        is_disabled: true
+        employment_income: 54_000  # $4,500/month * 12
+      person2:
+        age: 47
+        is_disabled: false
+        employment_income: 30_000  # $2,500/month * 12
+    spm_units:
+      spm_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: IL
+  output:
+    # person1 (disabled): gets exemptions
+    # person2 (not disabled/blind): uses gross income (no exemptions)
+    # Combined countable $6,323 > limit $6,168.75 → NOT eligible
+    il_hbwd_countable_income: 6_323
+    il_hbwd_income_eligible: [false, false]
+    il_hbwd_eligible: [false, false]
+    il_hbwd_person: [0, 0]
+
+# Test 4: Single disabled worker - eligible
+- name: Case 4, single disabled worker eligible.
+  period: 2025-01
+  absolute_error_margin: 0.3
+  input:
+    people:
+      person1:
+        age: 35
+        is_disabled: true
+        employment_income: 24_000  # $2,000/month * 12
+    spm_units:
+      spm_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: IL
+  output:
+    # Single person: 350% FPL = $5,285/month (2025)
+    # Countable income after exemptions < limit → eligible
+    il_hbwd_income_eligible: [true]
+    il_hbwd_eligible: [true]
+
+# Test 5: Single disabled worker - over income limit
+- name: Case 5, single disabled worker over income limit.
+  period: 2025-01
+  absolute_error_margin: 0.3
+  input:
+    people:
+      person1:
+        age: 40
+        is_disabled: true
+        employment_income: 72_000  # $6,000/month * 12
+    spm_units:
+      spm_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: IL
+  output:
+    # Single person: 350% FPL = $5,285/month
+    # Countable income > limit → NOT eligible
+    il_hbwd_income_eligible: [false]
+    il_hbwd_eligible: [false]
+
+# Test 6: Blind worker (not disabled) - gets blind exemptions
+- name: Case 6, blind worker gets exemptions.
+  period: 2025-01
+  absolute_error_margin: 0.3
+  input:
+    people:
+      person1:
+        age: 45
+        is_disabled: false
+        is_blind: true
+        employment_income: 36_000  # $3,000/month * 12
+    spm_units:
+      spm_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: IL
+  output:
+    # Blind worker is disability eligible and gets more generous exemptions
+    il_hbwd_disability_eligible: [true]
+    il_hbwd_income_eligible: [true]
+    il_hbwd_eligible: [true]
+
+# Test 7: Married couple - both disabled - both get exemptions
+- name: Case 7, married couple both disabled.
+  period: 2025-01
+  absolute_error_margin: 0.3
+  input:
+    people:
+      person1:
+        age: 50
+        is_disabled: true
+        employment_income: 36_000  # $3,000/month * 12
+      person2:
+        age: 48
+        is_disabled: true
+        employment_income: 24_000  # $2,000/month * 12
+    spm_units:
+      spm_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: IL
+  output:
+    # Both disabled, both get exemptions
+    # Combined gross $5,000/month, after exemptions < limit
+    il_hbwd_income_eligible: [true, true]
+    il_hbwd_eligible: [true, true]
+
+# Test 8: Disabled worker under age 16 - not age eligible
+- name: Case 8, disabled worker under age 16.
+  period: 2025-01
+  absolute_error_margin: 0.3
+  input:
+    people:
+      person1:
+        age: 15
+        is_disabled: true
+        employment_income: 12_000  # $1,000/month * 12
+    spm_units:
+      spm_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: IL
+  output:
+    # Under 16 - not age eligible for HBWD
+    il_hbwd_age_eligible: [false]
+    il_hbwd_eligible: [false]
+
+# Test 9: Disabled worker over age 64 - not age eligible
+- name: Case 9, disabled worker over age 64.
+  period: 2025-01
+  absolute_error_margin: 0.3
+  input:
+    people:
+      person1:
+        age: 65
+        is_disabled: true
+        employment_income: 24_000  # $2,000/month * 12
+    spm_units:
+      spm_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: IL
+  output:
+    # Over 64 - not age eligible for HBWD
+    il_hbwd_age_eligible: [false]
+    il_hbwd_eligible: [false]
+
+# Test 10: Family with disabled parent and children
+- name: Case 10, disabled parent with two children.
+  period: 2025-01
+  absolute_error_margin: 0.3
+  input:
+    people:
+      person1:
+        age: 38
+        is_disabled: true
+        employment_income: 48_000  # $4,000/month * 12
+      person2:
+        age: 12
+        is_disabled: false
+      person3:
+        age: 8
+        is_disabled: false
+    spm_units:
+      spm_unit:
+        members: [person1, person2, person3]
+    households:
+      household:
+        members: [person1, person2, person3]
+        state_code: IL
+  output:
+    # 3-person household: 350% FPL = $7,455/month
+    # Only person1 (disabled parent) can be HBWD eligible
+    # Children not disabled, not age eligible
+    il_hbwd_eligible: [true, false, false]
+
+# Test 11: Non-disabled, non-blind worker - not eligible
+- name: Case 11, non-disabled worker not eligible.
+  period: 2025-01
+  absolute_error_margin: 0.3
+  input:
+    people:
+      person1:
+        age: 30
+        is_disabled: false
+        is_blind: false
+        employment_income: 24_000  # $2,000/month * 12
+    spm_units:
+      spm_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: IL
+  output:
+    # Not disabled or blind - not disability eligible
+    il_hbwd_disability_eligible: [false]
+    il_hbwd_eligible: [false]
+
+# Test 12: Married couple at income threshold
+- name: Case 12, married couple at income threshold.
+  period: 2025-01
+  absolute_error_margin: 0.3
+  input:
+    people:
+      person1:
+        age: 55
+        is_disabled: true
+        employment_income: 48_000  # $4,000/month * 12
+      person2:
+        age: 52
+        is_disabled: false
+        employment_income: 24_000  # $2,000/month * 12
+    spm_units:
+      spm_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: IL
+  output:
+    # Combined gross $6,000/month
+    # person1 (disabled) gets exemptions, person2 (not disabled/blind) uses gross
+    # Combined countable should be just under limit
+    il_hbwd_income_eligible: [true, true]
+    il_hbwd_eligible: [true, false]  # person2 not disabled/blind
diff --git a/policyengine_us/tests/policy/baseline/gov/states/il/hfs/hbwd/integration.yaml b/policyengine_us/tests/policy/baseline/gov/states/il/hfs/hbwd/integration.yaml
index e5d4e970f5a..75ddb4826f1 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/il/hfs/hbwd/integration.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/il/hfs/hbwd/integration.yaml
@@ -143,13 +143,13 @@
   input:
     state_code: IL
     age: 55
-    is_disabled: false
+    is_disabled: true  # SSDI recipients are disabled
     social_security_disability: 18_000  # $1,500/month SSDI
     employment_income: 12_000  # $1,000/month part-time
     spm_unit_cash_assets: 5_000
   output:
     il_hbwd_age_eligible: true
-    il_hbwd_disability_eligible: true  # Via SSDI receipt
+    il_hbwd_disability_eligible: true
     il_hbwd_employment_eligible: true
     il_hbwd_income_eligible: true
     il_hbwd_asset_eligible: true
diff --git a/policyengine_us/variables/gov/states/il/hfs/hbwd/eligibility/il_hbwd_disability_eligible.py b/policyengine_us/variables/gov/states/il/hfs/hbwd/eligibility/il_hbwd_disability_eligible.py
index b8be18389a0..414f98c4323 100644
--- a/policyengine_us/variables/gov/states/il/hfs/hbwd/eligibility/il_hbwd_disability_eligible.py
+++ b/policyengine_us/variables/gov/states/il/hfs/hbwd/eligibility/il_hbwd_disability_eligible.py
@@ -18,7 +18,9 @@ def formula(person, period, parameters):
         # rules related to earned income do not apply" - so we use is_disabled
         # (medical definition) instead of is_ssi_disabled (which includes SGA test).
         # See: https://il.db101.org/il/programs/health_coverage/how_health/program2b.htm
+        # SSA recognizes blindness as a category of disability (SSI has Aged, Blind, Disabled).
         is_disabled = person("is_disabled", period.this_year)
+        is_blind = person("is_blind", period)
         # Or currently receiving SSDI
         receives_ssdi = person("social_security_disability", period) > 0
-        return is_disabled | receives_ssdi
+        return is_disabled | is_blind | receives_ssdi
diff --git a/policyengine_us/variables/gov/states/il/hfs/hbwd/income/earned/il_hbwd_countable_earned_income.py b/policyengine_us/variables/gov/states/il/hfs/hbwd/income/earned/il_hbwd_countable_earned_income.py
index f9d09085d13..d77cb248298 100644
--- a/policyengine_us/variables/gov/states/il/hfs/hbwd/income/earned/il_hbwd_countable_earned_income.py
+++ b/policyengine_us/variables/gov/states/il/hfs/hbwd/income/earned/il_hbwd_countable_earned_income.py
@@ -15,10 +15,19 @@ class il_hbwd_countable_earned_income(Variable):
     )
     defined_for = StateCode.IL
 
-    adds = ["il_aabd_earned_income_after_exemption_person"]
-    # HBWD uses the same earned income calculation as AABD per
-    # 89 Ill. Admin. Code § 120.510(i) referencing § 120.362 and § 120.370
-    # § 120.362 and § 113.120 have identical exemption amounts:
-    # - $25 flat exemption (§ 120.362(a) / § 113.120(a))
-    # - $20 + 50% of next $60 for disabled workers (§ 120.362(b)(1) / § 113.120(b))
-    # § 120.370 references AABD MANG work expense deductions
+    def formula(person, period, parameters):
+        # Per § 120.510(i), earned income exemptions apply only to the
+        # disabled/blind worker's earnings, not to the spouse's.
+        # Per § 120.510(f), the spouse's income is counted at gross.
+        is_disabled = person("is_disabled", period)
+        is_blind = person("is_blind", period)
+        is_hbwd_worker = is_disabled | is_blind
+
+        earned_income_with_exemption = person(
+            "il_aabd_earned_income_after_exemption_person", period
+        )
+        gross_earned_income = person("il_hbwd_gross_earned_income", period)
+
+        return where(
+            is_hbwd_worker, earned_income_with_exemption, gross_earned_income
+        )
diff --git a/policyengine_us/variables/gov/states/il/hfs/hbwd/income/il_hbwd_countable_income.py b/policyengine_us/variables/gov/states/il/hfs/hbwd/income/il_hbwd_countable_income.py
index 2f5c2b159d4..90710334448 100644
--- a/policyengine_us/variables/gov/states/il/hfs/hbwd/income/il_hbwd_countable_income.py
+++ b/policyengine_us/variables/gov/states/il/hfs/hbwd/income/il_hbwd_countable_income.py
@@ -14,8 +14,9 @@ class il_hbwd_countable_income(Variable):
     defined_for = "is_tax_unit_head_or_spouse"
 
     adds = [
-        "il_aabd_earned_income_after_exemption_person",
+        "il_hbwd_countable_earned_income",
         "il_hbwd_countable_unearned_income",
     ]
     # Per § 120.510(f), count income of individual AND spouse
+    # Per § 120.510(i), earned income exemptions apply only to disabled worker
     # Adds automatically sums across SPM unit members