The concept and practice of ’livelihood’ has undergone various stages in the development of Western countries. Its core has always focused on eradicating rural poverty and promoting rural development. This study utilizes the entropy value method to measure the comprehensive development level of the livelihood sustainability of farm households. Additionally, the Theil index is used to measure the presentation income gap, and multiple linear regression is utilized to test the impact of the livelihood capital sustainability of farm households on the presentation income gap. Results showed that the the sustainability of farm households’ livelihood capital has a significant negative impact on the urban-rural income gap. In other words, improving the livelihood capital of farm households can significantly reduce the urban-rural income gap. Accordingly, it is proposed that efforts be made to enhance the sustainability of farm households’ livelihoods, and to increase the contribution of the sustainable enhancement of farm households’ livelihood capital to narrowing the rural-urban income gap.