Introduction: The subsidy has effects on economic behavior of the households, producers and government with various aspects such as efficiency, inequality and income distribution. The goal of this article is identifying the income distribution and households welfare in the province Fars before and after subsidies targeting in the period of 1387-90.

Method: To achieve the goals in this article, we has been used the Gini index and atkinson social welfare function. The results of the Indicators have been calculated with the use of the cost-income household data, shows that the Income decile index and GINI index for urban and rural communities in the years after subsidies targeting are reduced.

Finds: The results of Atkinson inequality index are also consistent Gini index result, with this difference, with increasing in inequality aversion parameter, the Atkinson inequality index increases. This means that if policy makers will have efficient targeting subsidies, should be income transfers more from high-income to low-income groups done.

Discussion: Evaluation of welfare changes shows that, household welfare due to inflation and the decline in real income has been declining. Meanwhile the elasticity of welfare than income and inequality in rural areas in all the years is more than the urban areas.