This study, using a regression-based analysis of variance (ANOVA) model, examines income inequality in the urban and rural areas of Chaharmahal and Bakhtiari Province over the period 1984–2021 and evaluates the impact of the Targeted Subsidies Policy on inequality levels. The findings obtained from model estimation indicate that income inequality in the province’s urban areas is lower than the average level of inequality observed in urban areas nationwide. Likewise, income inequality in the province’s rural areas is also lower than that of rural areas at the national level. Furthermore, based on the results of the analysis of variance (ANOVA), income inequality in the rural areas of the province is significantly higher than in the urban areas. In addition, the findings of the study indicate that the implementation of the targeted subsidy policy has led to a reduction in income inequality in both the urban and rural sectors of Chaharmahal and Bakhtiari Province. However, it should be emphasized that this reduction in inequality has not necessarily been accompanied by improvements in welfare or an enhancement of the standard of living in the province.