This study examines, in a developing-country context, the contribution of community forestry to household income with particular emphasis on group heterogeneity and equity in benefit distribution. The economic analysis of household-level benefits reveals that poorer households are currently benefiting less in absolute terms from community forestry than less poor households. In terms of the contribution of forests to total household income, the study results suggest that the poor are actually less dependent on forests than the rich, a finding that is somewhat contradictory to results from other similar studies. The average ‘poor’ household obtains Nepalese rupees (Nrs) 7,756 gross income from community forest annually, while the more ‘rich’ households obtain on average Nrs 24,466 per year. In terms of the contribution of forests to net household income, the study results seem to suggest an inverted U-shaped relationship – as income increases dependency on forest resources may decline. Econometric analysis suggests that income from the community forests is related to socio-economic attributes and private endowments of households. Households with land and livestock assets and upper caste households gain more from the commons, while better-educated households depend less on forest resources. Female-headed households benefit less from community forests, further aggravating the inequity in distribution of benefits. The study makes a number of recommendations to improve community forestry in Nepal.