Following the Office of Management and Budget's (OMB) Statistical Policy Directive 14, the Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is in poverty. If a family's total income is less than the family's threshold, then that family and every individual in it is considered in poverty. The official poverty thresholds do not vary geographically, but they are updated for inflation using the Consumer Price Index (CPI-U). The official poverty definition uses money income before taxes and does not include capital gains or noncash benefits (such as public housing, Medicaid, and food stamps).
For historical information, see the History of the Poverty Measure page in the About section of the Poverty subtopic site.
The income used to compute poverty status includes (before taxes):
Money income does not include:
Poverty thresholds are the dollar amounts used to determine poverty status.
The Census Bureau assigns each person or family one out of 48 possible poverty thresholds.
To calculate total family income, the incomes of all related family members that live together are added up to determine poverty status. If an individual or group of individuals (such as housemates) are not living with family members, their own individual income is compared with their individual poverty threshold.
Thus, all family members have the same poverty status, and some families may be composed of single unrelated individuals.
If total family income:
Poverty status cannot be determined for people in:
Additionally, poverty status cannot be determined for unrelated individuals under age 15 (such as foster children) because income questions are asked of people age 15 and older and, if someone is under age 15 and not living with a family member, we do not know their income. Since we cannot determine their poverty status, they are excluded from the “poverty universe” (table totals).
Family A has five members: two children, one mother, one father, and one great-aunt.
The family’s 2022 poverty threshold (below) is $35,801
Suppose the members’ incomes in 2022 were:
Thus, Family A’s total income for 2022 was $36,500.
The total family income divided by the poverty threshold is called the Ratio of Income to Poverty.
Income / Threshold = $36,500 / $35,801 = 1.02
The difference in dollars between family income and the family’s poverty threshold is called the Income Deficit (for families in poverty) or Income Surplus (for families above poverty).
Income – Threshold = $36,500 - $35,801 = $699
Since Family A’s total income was greater than their poverty threshold, they are considered not “in poverty” according to the official definition.