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OBJECTIVES: In a context of rising income inequality and policies to improve rights and inclusion for persons with disabilities, this paper examines income inequality trends by household work limitation status in the United States from 1981–2018. METHODS: Data comes from the March Supplement of the Current Population Survey using the work limitation disability measure to estimate decomposable Generalized Entropy measures of income inequality, and progressivity of government transfers and disability payments. RESULTS: Over the 1981–2018 period, inequality within the group of households with work limitations has been around 30 percent higher than inequality within the group of households without work limitations. Both households with and without work limitations have seen a similar 70 percent rise in income inequality since 1981. Progressivity of government transfers and disability payments increased among households with limitations, but not among other households. CONCLUSIONS: Income inequality is higher within the group of households with work limitations compared to other households and has been rising for both groups. Policies aimed to enhance the economic and social participation of persons with disabilities over this period may have mitigated this rising trend. Disability considerations should be part of research and policy on income inequality.