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Background Extensive research has shown strong associations between income and health. However, the health effects of income dynamics over time are less known. We investigated how stability, volatility and trajectory in family incomes from 2002 to 2011 predicted (1) fair/poor self-rated health and (2) the presence of a longstanding illness or health problem in 2012. Methods The data came from the 2012 wave of the Longitudinal and International Study of Adults linked to annual family income data for 2002 to 2011 from the Canada Revenue Agency. We executed a series of binary logistic regressions to examine associations between health and average family income over the decade (Model 1), number of years in the bottom quartile (Model 2) and top quartile (Model 3) of family incomes, standard deviation of family incomes (Model 4), absolute difference between family income at the end and start of the period (Model 5), and number of years in which inflation-adjusted family income went down by more than 1% (Model 6) and up by more than 1% (Model 7) from 1 year to the next. The analyses were conducted separately for women and men. Results Average family income over the decade was strongly associated with both self-rated health and the presence of a longstanding illness or health problem. More years spent in the bottom quartile of family incomes corresponded to elevated odds of fair/poor self-rated health and the presence of a longstanding illness or health problem. Steady decreases in family income over the decade corresponded to elevated odds of fair/poor self-rated health for men and more years spent in the top quartile of family incomes over the decade corresponded to elevated odds of fair/poor self-rated health for women. Conclusion Previous studies of the association between family income and health in Canada may have overlooked important issues pertaining to family income stability and change that are impactful for health.