(a) Definition. Program income means gross income earned by the State or a subrecipient that is directly generated by a supported activity or earned as a result of the Federal award during the period of performance.

(b) Inclusions. Program income includes but is not limited to income from fees for services performed, the use or rental of real or personal property acquired under Federal awards, the sale of commodities or items fabricated under a Federal award, license fees and royalties on patents and copyrights, and principal and interest on loans made with Federal award funds.

(c) Exclusions. Program income does not include interest on grant funds, rebates, credits, discounts, taxes, special assessments, levies, and fines raised by a State or a subrecipient, and interest earned on any of them.

(d) Use of program income—(1) Addition. Program income shall ordinarily be added to the funds committed to the Federal award (i.e., Section 402, Section 405(b), etc.) under which it was generated. Such program income shall be used to further the objectives of the program area under which it was generated.

(2) Cost sharing or matching. Program income may be used to meet cost sharing or matching requirements only upon written approval of the Regional Administrator. Such use shall not increase the commitment of Federal funds.