Independent Living Trusts and Contributions Act of 1988 - Amends title XVI (Supplemental Security Income) (SSI) of the Social Security Act (the Act) to exclude from an SSI recipient's income for SSI eligibility purposes: (1) contributions received and used within 30 days to obtain specified social services; (2) contributions of clothing or up to $750 of cash per year for the purchase of clothing; (3) contributions of up to $7,200 per year for rent, mortgage payments, or home maintenance; (4) loans received by or repaid to such individual; and (5) contributions made by any other person to a trust for the SSI recipient if one purpose of the trust is to provide the recipient with such social services, clothing, or home or housing payments. Excludes such contributions from the resources of SSI recipients.

Makes this Act's income exclusions applicable under title XIX (Medicaid) of the Act.

Directs the Secretary of Health and Human Services to notify SSI applicants and recipients of the opportunities this Act provides them to exercise greater independence and the applicability of the reduction in SSI eligibility thresholds and benefits to individuals living in another person's household and receiving support and maintenance from such person.