What Is Means Test?
The means test is the two-step income calculation required under 11 U.S.C. § 707(b) that determines whether you qualify for Chapter 7 bankruptcy. Step one compares your household's current monthly income to your state's median income. If you are below the median, you pass automatically. If above, step two deducts allowed expenses to calculate your projected disposable income — if too high, you must file Chapter 13 instead.
Key Facts
- The means test was introduced by the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 to prevent high-income filers from abusing Chapter 7 — before BAPCPA, anyone could file Chapter 7 regardless of income
- Current monthly income (CMI) is calculated as the average of your gross income over the 6 full calendar months before filing — including wages, self-employment income, rental income, pensions, unemployment compensation, and regular contributions from others
- State median income thresholds vary significantly: for a household of 4, the 2024 median ranges from approximately $68,000 in Mississippi to over $120,000 in New Jersey and Connecticut — updated every April and November by the U.S. Trustee Program
- If your income exceeds the state median, the second step deducts IRS Local and National Standards for housing, transportation, food, and healthcare — plus actual secured debt payments, taxes, and mandatory payroll deductions — to calculate disposable income
- You fail the means test if your projected 60-month disposable income exceeds $9,075 (i.e., more than $151.25/month). Between $5,475 and $9,075, you fail only if the total would pay at least 25% of your unsecured debts
Live Data
How Does the Means Test Work?
The means test has two steps, and many filers only need to complete the first:
Step 1: Income Comparison
Calculate your "current monthly income" (CMI) — the average of all gross household income over the 6 full calendar months before filing. Multiply by 12 to get annualized income. Compare this to your state's median income for your household size:
- Below state median → You pass. No further calculation needed. You qualify for Chapter 7.
- At or above state median → Proceed to Step 2.
Social Security benefits, payments to victims of war crimes or terrorism, and certain disability payments are excluded from the CMI calculation.
Step 2: Disposable Income Calculation
If your income exceeds the median, you must calculate your projected monthly disposable income by subtracting allowed deductions:
- IRS National Standards: Food, clothing, household supplies, personal care, and miscellaneous — fixed amounts based on household size
- IRS Local Standards: Housing/utilities (varies by county) and transportation (varies by region) — you get the lesser of the standard or your actual expense
- Actual expenses: Taxes, mandatory payroll deductions (Social Security, Medicare), term life insurance, court-ordered payments, education for a disabled child, health insurance, telecom ($75/month cap)
- Secured debt payments: Average monthly payment on mortgages, car loans, and other secured debts over the next 60 months
- Priority debt payments: Average monthly payment on priority debts (taxes, child support) over 60 months
The remainder is your projected monthly disposable income.
What If I Fail the Means Test?
Failing the means test does not mean you cannot file bankruptcy — it means you likely cannot file Chapter 7. Your options are:
- File Chapter 13: There is no income ceiling for Chapter 13 (though there are debt limits). Your disposable income determines your plan payment.
- Wait and refile: Because the CMI uses a 6-month lookback, a recent job loss, income reduction, or large medical expense can change the result. Some filers wait a few months for the lookback window to shift.
- Special circumstances: Even if the math says you fail, you can argue "special circumstances" under § 707(b)(2)(B) — such as a serious medical condition or military service — that justify additional expenses not captured by the standard deductions.
State Median Income Variations
The U.S. Trustee Program publishes updated median income tables every April and November based on Census Bureau data. The differences are substantial and directly affect who qualifies for Chapter 7:
- Highest medians: New Jersey, Maryland, Connecticut, Massachusetts — household of 4 exceeds $110,000. More filers pass the means test because the bar is higher.
- Lowest medians: Mississippi, West Virginia, Arkansas, New Mexico — household of 4 around $65,000-$75,000. The lower threshold means more filers must use Chapter 13.
The IRS Local Standards for housing and transportation also vary by location, so a filer in a high-cost area gets larger deductions in Step 2 even if their income exceeds the median.
State-by-State Variations
The means test formula is identical nationwide, but state median income thresholds and IRS Local Standards for housing/transportation vary dramatically, making the same income pass in one state and fail in another.
| State | Key Difference |
|---|---|
| New Jersey | Among the highest median income thresholds nationally (household of 4: ~$120,000+). High IRS Local Standards for housing and transportation. More filers pass Step 1 automatically. However, high cost of living means those who fail Step 1 often pass Step 2 after deductions. |
| Mississippi | Lowest median income threshold in the nation (household of 4: ~$68,000). Lower IRS Local Standards. More filers fail Step 1 and must complete Step 2. However, lower housing costs also mean Step 2 deductions are smaller. |
| California | High median income (household of 4: ~$105,000+). Very high IRS Local Standards for housing, especially in Bay Area and Los Angeles County — filers who fail Step 1 often pass Step 2 because allowed housing deductions are large. |
| Texas | Moderate median income (household of 4: ~$85,000). No state income tax, which slightly reduces the deductions available in Step 2 (fewer tax deductions). IRS Local Standards vary significantly between Dallas/Houston/Austin and rural areas. |
| West Virginia | Among the lowest median income thresholds (household of 4: ~$70,000). Lower IRS Local Standards. More filers are pushed to Chapter 13 relative to population. High unemployment and healthcare costs may support special circumstances arguments. |
Frequently Asked Questions
What income is included in the means test?
The means test counts all gross income received in the 6 calendar months before filing: wages, salary, tips, self-employment, rental income, pensions, unemployment, alimony, and regular contributions from others (like a partner paying bills). Social Security benefits, payments to war crime victims, and certain disability payments are excluded.
Can I still file bankruptcy if I fail the means test?
Yes — you can file Chapter 13 bankruptcy, which has no income ceiling (only debt limits). You can also wait for the 6-month lookback window to change (if your income has dropped), or argue special circumstances like a serious medical condition or active military service that justify additional expense deductions.
How do I find my state's median income for the means test?
The U.S. Trustee Program publishes current median income tables at justice.gov/ust, updated every April and November. Tables are broken down by state and household size (1 person through 4+ persons, with an additional per-person amount for households larger than 4).
Does the means test apply to Chapter 13?
Not as a qualification barrier — anyone with regular income can file Chapter 13 regardless of income level (subject to debt limits). However, the means test calculation determines whether you get a 3-year or 5-year plan: below-median filers can propose a 3-year plan, while above-median filers must commit to 5 years.
What are special circumstances that can override the means test?
Under § 707(b)(2)(B), you can overcome a means test failure by documenting special circumstances such as a serious medical condition, active military duty, recent job loss not yet reflected in the 6-month income average, or other factors that require expenses beyond the IRS standards. You must document the amount and provide a detailed explanation.