Current monthly income, IRS national and local expense standards, the presumption of abuse formula, and the regional cost-of-living variables that drive outcomes.
The means test is the eligibility filter enacted by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) and codified at 11 U.S.C. Section 707(b). Its function is to identify above-median-income individual consumer debtors whose Chapter 7 filings should be presumed abusive of the bankruptcy process. The test does not adjudicate the merits of a filing; it produces a numerical output that determines which procedural posture (Chapter 7 with no presumption, Chapter 7 with presumption rebuttable for special circumstances, or conversion or dismissal) applies.
The means test applies only to individual debtors whose debts are primarily consumer debts. A debtor whose debts are primarily business debts is exempt from the means test entirely, regardless of income. Whether debts are primarily consumer depends on dollar-weighted classification, not on the count of accounts. The threshold question, often dispositive, is whether mortgage debt incurred to acquire a personal residence counts as consumer debt; circuits diverge.
Current monthly income is defined at 11 U.S.C. Section 101(10A) as the average monthly income from all sources received by the debtor during the six-month period ending on the last day of the calendar month immediately preceding the petition date. The definition is mechanical and backward-looking. A debtor who lost employment in the month of filing still includes prior-period wages in CMI; a debtor whose income spiked during the look-back excludes nothing.
CMI is the average of the six pre-petition calendar months. Sources included are gross wages, salary, tips, bonuses, overtime, commissions; income from operation of a business, profession, or farm; interest, dividends, and royalties; rental income; pension and retirement income; unemployment compensation (excluded only if the debtor opts the foreign-source exclusion for benefits received under the Social Security Act); regular contributions to the household from non-debtors; and amounts paid by a third party for the debtor's household expenses. Social Security benefits are expressly excluded by statute. Tax refunds are not CMI; they reflect prior-period income already counted as wages.
The CMI annualized (multiplied by twelve) is then compared to the applicable state median family income for a household of the debtor's size. The state median figures are published by the U.S. Census Bureau and updated by the U.S. Trustee Program. A debtor at or below median exits the means test at this point; no further calculation is required and there is no presumption of abuse.
An above-median debtor proceeds to the disposable-income calculation. Allowed deductions from CMI are organized into three categories: (1) IRS National Standards for food, clothing, household supplies, personal care, and miscellaneous; (2) IRS Local Standards for housing (broken into a non-mortgage component and a mortgage-or-rent component, both county-specific) and transportation (broken into ownership costs and operating costs, also locality-specific); and (3) Other Necessary Expenses, which include taxes, mandatory payroll deductions, term life insurance, court-ordered support payments, childcare, healthcare not covered by insurance, telecommunications service, and education expenses for an employment-required course or for a child under age eighteen.
The IRS Standards are not optional and not negotiable. They are fixed national or local figures published by the Internal Revenue Service for use in the Service's own collection-financial-standards program. The bankruptcy use is a borrowing of that schedule; courts have rejected challenges to the IRS Standards as the wrong measure of necessary expenses, observing that Congress incorporated them by reference and that judicial substitution of a different schedule would defeat the statutory design.
Above-median debtors also deduct (a) average monthly payments on secured debts coming due within 60 months following the petition date, calculated as the total of the next 60 months' contractual payments divided by 60; (b) priority debt obligations divided by 60; (c) the projected administrative expenses of a Chapter 13 plan, capped at the U.S. Trustee's published percentage; and (d) certain other categorical expenses identified at Section 707(b)(2)(A)(ii) through (iv).
The output of step two is monthly disposable income. The presumption of abuse arises if monthly disposable income, multiplied by 60, is (a) at least $16,675 (the 2024-2025 indexed dollar amount; the figure is adjusted triennially under Section 104), or (b) at least $10,000 and at least 25 percent of the debtor's nonpriority unsecured debt. A debtor whose 60-month disposable income falls below both thresholds is not presumed abusive; one above either threshold is presumed abusive. The dollar thresholds are not policy guidelines; they are statutory bright lines.
The presumption is rebuttable only by demonstration of special circumstances that justify additional expenses or income adjustments and produce a re-computed disposable income below the threshold. Section 707(b)(2)(B) identifies "a serious medical condition or a call or order to active duty in the Armed Forces" as illustrative; courts have read the category narrowly, requiring the debtor to itemize each additional expense and to provide documentation. Unanticipated future expenses, ordinary lifestyle preferences, and discretionary obligations are not special circumstances.
BAPCPA delegates the calibration of necessary expenses to the IRS Standards, which are themselves county-specific for housing and transportation. The practical effect is a substantial geographic dispersion in means-test outcomes for debtors with otherwise identical income and household profiles. A household earning the same gross income in a high-cost coastal metropolitan area and in a low-cost interior county will produce different disposable-income outputs because their local housing and transportation allowances differ.
The transportation operating-cost figure is regional rather than county-specific; the ownership-cost figure depends on the number of vehicles owned (capped at two for a married household). A debtor without an auto loan or lease still receives the operating-cost allowance for any vehicle owned; courts have divided on whether the ownership-cost allowance is available to a debtor whose vehicle is paid off. The Supreme Court resolved the question for Chapter 13 purposes in Ransom v. FIA Card Services, N.A., 562 U.S. 61 (2011), holding the ownership allowance unavailable to a debtor with no current loan or lease obligation; the holding is generally applied in Chapter 7 means-test analysis as well.
Beyond the Social Security exclusion, CMI also excludes:
Disability benefits paid under a private long-term disability policy are CMI; only Social Security disability benefits are excluded. Veterans' benefits are excluded only if paid for a service-connected disability. The line items matter; a misclassification on the Form 122A-1 can flip a below-median debtor into above-median territory.
Household size determines which state median figure applies, which IRS National Standard tier applies, and (in some districts) which local-standard tier applies. Districts split on the proper measure: the "heads on beds" approach counts every person who shares the debtor's residence; the "income tax dependents" approach counts only persons the debtor could claim as dependents under the Internal Revenue Code; the "economic unit" approach asks whether the additional person contributes to or draws from the household economy. The choice can determine whether the debtor is above- or below-median.
The means test is implemented through Official Forms 122A-1 (Statement of Your Current Monthly Income), 122A-1Supp (Statement of Exemption from Presumption of Abuse), and 122A-2 (Chapter 7 Means Test Calculation). The Administrative Office of the United States Courts updates the forms periodically. The forms are reproduced at the United States Courts website. Errors on the forms - particularly in CMI computation, household size, or allowed-expense documentation - are the most common source of trustee objection in Chapter 7 cases of above-median debtors.
The means test is mechanical, but the inputs are contestable. The arithmetic of Section 707(b) is fixed; the determinations of household size, source classification of income, special-circumstances expense allowance, and primarily-consumer-debt characterization are not. Most contested means-test outcomes turn on input determinations, not on the formula.
This page provides general information about the bankruptcy means test under 11 U.S.C. Section 707(b). It does not constitute legal advice. The applicability of the means test to a particular debtor depends on inputs and characterizations that should be evaluated by qualified counsel.
Last modified: 2026-05-22