<p>Income inequality remains a persistent global challenge. In the context of rapid digital adoption and evolving welfare paradigms, the digital economy and basic public services have emerged as critical instruments for alleviating regional income disparities. Using China as a case study, this research applies a two-way fixed effects panel model to empirically assess the influence of the digital economy on regional income convergence and to explore the nonlinear moderating role of basic public services in this relationship. The findings reveal several key insights. First, the digital economy exhibits a U-shaped nonlinear association with regional income inequality. Second, basic public services exert a significant and nonlinear moderating effect. Third, this moderation amplifies the U-shaped curve and shifts its inflection point toward the lower right quadrant. Finally, basic public services themselves exert a substantial direct effect in narrowing regional income gaps. Together, these results provide novel empirical evidence on the complex interplay among the digital economy, public services, and regional inequality, offering meaningful implications for policymakers and stakeholders seeking to foster inclusive growth and reduce socioeconomic disparities.</p>