diff --git a/packages/loot-core/src/server/budget/categoryTemplate.ts b/packages/loot-core/src/server/budget/categoryTemplate.ts
index 37dcbbecb6d..9dcd5180700 100644
--- a/packages/loot-core/src/server/budget/categoryTemplate.ts
+++ b/packages/loot-core/src/server/budget/categoryTemplate.ts
@@ -46,6 +46,8 @@ export class CategoryTemplate {
     let fromLastMonth;
     if (lastMonthBalance < 0 && !carryover) {
       fromLastMonth = 0;
+    } else if (category.is_income) {
+      fromLastMonth = 0;
     } else {
       fromLastMonth = lastMonthBalance;
     }
diff --git a/upcoming-release-notes/4300.md b/upcoming-release-notes/4300.md
new file mode 100644
index 00000000000..68522dbf8a7
--- /dev/null
+++ b/upcoming-release-notes/4300.md
@@ -0,0 +1,6 @@
+---
+category: Bugfix
+authors: [youngcw]
+---
+
+Fix tracking budget income templates