Inclusionary zoning (IZ) is municipal and county planning ordinances that require or provide incentives when a given percentage of units in a new housing development be affordable by people with low to moderate incomes. Such housing is known as inclusionary housing. The term inclusionary zoning indicates that these ordinances seek to counter exclusionary zoning practices, which exclude low-cost housing from a municipality through the zoning code. (For example, single-family zoning makes it illegal to build multi-family apartment buildings.) Non-profit affordable housing developers build 100% of their units as affordable, but need significant taxpayer subsidies for this model to work. Inclusionary zoning allows municipalities to have new affordable housing constructed without taxpayer subsidies. In order to encourage for-profit developers to build projects that include affordable units, cities often allow developers to build more total units (a "density bonus") than their zoning laws currently allow so that there will be enough profit generating market-rate units to offset the losses from the below market-rate units and still allow the project to be financially feasible. Inclusionary zoning can be mandatory or voluntary, though the great majority of units have been built as a result of mandatory programmes. There are variations among the set-aside requirements (percentage of units set-aside for low-income residents), affordability levels (what income level is considered "low-income"), and length of time the unit is deed-restricted as affordable housing.

In practice, these policies involve placing deed restrictions on 10–30% of new houses or apartments in order to make the cost of the housing affordable to lower-income households. The mix of "affordable housing" and "market-rate" housing in the same neighborhood is seen as beneficial by city planners and sociologists. Another goal of inclusionary zoning is to build mixed-income communities, rather than having poor households concentrated in specific city neighborhoods. Economists state that IZ functions as a price control on a percentage of units and has similar negative effects as other price controls (rent control) being that it discourages the supply of new housing. It can also be understood similar to impact fees as an "inclusionary tax" on market-rate units which raises the prices of new non-price-controlled units in that development and thereby diminishes the financial incentive to create new housing.

Most inclusionary zoning is enacted at the municipal or county level; when imposed by the state, as in Massachusetts, it has been argued that such laws usurp local control. In such cases, developers can use inclusionary zoning to avoid certain aspects of local zoning laws.

During the mid- to late-20th century, new suburbs grew and expanded around American cities as middle-class house buyers, supported by federal loan programs such as Veterans Administration housing loan guarantees, left established neighborhoods and communities. These newly populated places were generally more economically homogeneous than the cities they encircled. Many suburban communities enacted local ordinances, often in zoning codes, to preserve the character of their municipality. One of the most commonly cited exclusionary practices is the stipulation that lots must be of a certain minimum size and houses must be set back from the street a certain minimum distance. In many cases, these housing ordinances prevented affordable housing from being built, because the large plots of land required to build within the code restrictions were cost-prohibitive for modestly priced houses. Communities have remained accessible to wealthier citizens because of these ordinances, effectively shutting the low income families out of desirable communities. Such zoning ordinances have not always been enacted with conscious intent to exclude lower income households, but it has been the unintended result of such policies.

By denying lower income families access to suburban communities, many feel that exclusionary zoning has contributed to the maintenance of inner city ghettos. Supporters of inclusionary zoning point out that low income households are more likely to become economically successful if they have middle class neighbors as peers and role models. When effective, inclusionary zoning reduces the concentration of poverty in slum districts where social norms may not provide adequate models of success. Education is one of the largest components in the effort to lift people out of poverty; access to high-quality public schools is another key benefit of reduced segregation. Statistically, a poor child in a school where 80% of the children are poor scores 13–15% lower compared to environments where the poor child's peers are 80% middle class. But this poor child, unlike their middle-class peers in market-rate housing, loses out on intergenerational wealth.

In many of the communities where inclusionary zoning has been put into practice, income requirements allow households that earn 80–120% of the median income to qualify for the "affordable" housing. This is because in many places high housing prices have prevented even median-income households from buying market-rate properties. This is especially prominent in California, where only 16% of the population could afford the median-priced home during 2005.

Economists state that IZ functions as a price control on a percentage of units and has similar negative effects as other price controls (rent control) being that it discourages the supply of new housing. It can also be understood similar to impact fees as an "inclusionary tax" on market-rate units which raises the prices of new non-price-controlled units in that development and thereby diminishes the financial incentive to create new housing.

Inclusionary zoning ordinances vary substantially among municipalities. These variables can include: