There is widespread consensus that income and subjective well-being are linked, but when and why they are connected is subject to ongoing debate. We draw on prior research that distinguishes between the frequency and intensity of happiness to suggest that higher income is more consistently linked to how frequently individuals experience happiness than how intensely happy each episode is. This occurs in part because lower-income individuals spend more time engaged in passive leisure activities, reducing the frequency but not the intensity of positive affect. Notably, we demonstrate that only happiness frequency underlies the relationship between income and life satisfaction. Data from an experience sampling study (N = 394 participants, 34,958 daily responses), a preregistered cross-sectional study (N = 1,553), and a day reconstruction study (N = 13,437) provide empirical evidence for these ideas. Together, this research provides conceptual and empirical clarity into how income is related to happiness.