(a) Except as provided in subdivision (c), the following income shall be exempt from the calculation of the income of the family for purposes of subdivision (a) of Section 11450:

1. (1) If disability-based unearned income does not exceed two hundred twenty-five dollars ($225), both of the following amounts:

   1. (A) All disability-based unearned income, plus any amount of not otherwise exempt earned income equal to the amount of the difference between the amount of disability-based unearned income and two hundred twenty-five dollars ($225).
   2. (B) Fifty percent of all not otherwise exempt earned income in excess of the amount applied to meet the differential applied in subparagraph (A).

2. (2) If disability-based unearned income exceeds two hundred twenty-five dollars ($225), both of the following amounts:

   1. (A) All of the first two hundred twenty-five dollars ($225) in disability-based unearned income.
   2. (B) Fifty percent of all earned income.

(b) For purposes of this section:

1. (1) Earned income means gross income received as wages, salary, employer-provided sick leave benefits, commissions, or profits from activities such as a business enterprise or farming in which the recipient is engaged as a self-employed individual or as an employee.
2. (2) Disability-based unearned income means state disability insurance benefits, private disability insurance benefits, temporary workers’ compensation benefits, social security disability benefits, paid family leave benefits, and any veteran’s disability compensation.
3. (3) Unearned income means any income not described in paragraph (1) or (2).

(c) Each two-hundred-twenty-five-dollar ($225) amount specified in subdivision (a), shall be increased as follows:

1. (1) Effective the date on which this section becomes operative pursuant to subdivision (d), to five hundred dollars ($500).
2. (2) Effective one year from the date on which this section becomes operative pursuant to subdivision (d), to five hundred fifty dollars ($550).
3. (3) Effective two years from the date on which this section becomes operative pursuant to subdivision (d), to six hundred dollars ($600).