This study investigates the heterogenous effect of digital finance on narrowing income gap. It is found that Internet digital finance and digital finance in banking both help narrow income gap and a U-shaped relation is found between digital finance development and income gap. Internet digital finance alleviates information constraints, while digital finance in banking alleviates credit constraints in narrowing income gap. The two forms of digital finance have stronger effects on the income gap in economically and digitally underdeveloped areas. This study provides suggestions for developing digital finance, breaking the dual urban-rural financial structure and promoting common prosperity.