Abstract: In the process of new urbanization, government fiscal expenditure has played an important role in urban-rural income distribution and social public services, and is an important financial guarantee for promoting urban-rural integration. Based on the relevant data of the Yangtze River Delta urban agglomeration from 2014 to 2020, this paper constructed an econometric model to study the impact of new urbanization and the scale and structure of fiscal expenditure on the urban-rural income gap. The index of new-type urbanization was measured by the entropy method, and it was used as the threshold variable for empirical analysis. The results showed that the level of new-type urbanization in the Yangtze River Delta was on the rise year by year, but the level within the region was unbalanced. New urbanization, the scale of fiscal expenditure, social security expenditure and expenditure on science, education, culture and health all had threshold effect. When the level of new urbanization was raised to a certain threshold value, the narrowing effect on the income gap between urban and rural areas became stronger, the role of the scale of fiscal expenditure and expenditure on science, education, culture and health turned from widening the gap to narrowing, and the role of social security expenditure turned from insignificant influence to narrowing.