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). Show For historical information, see the History of the Poverty Measure page in the About section of the Poverty subtopic site. Money Income: Income Used to Compute Poverty StatusThe income used to compute poverty status includes (before taxes):
Money income does not include:
Poverty Thresholds: Measure of NeedPoverty 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.
ComputationTo 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:
People Whose Poverty Status Cannot Be DeterminedPoverty 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). ExampleSituationFamily A has five members: two children, one mother, one father, and one great-aunt. Step 1: Determine the family’s poverty threshold for that yearThe family’s 2021 poverty threshold (below) is $33,148. Step 2: Calculate the total family income for the same yearSuppose the members’ incomes in 2021 were:
Thus, Family A’s total income for 2021 was $36,500. Step 3: Compare the family’s total income with the poverty thresholdThe total family income divided by the poverty threshold is called the Ratio of Income to Poverty. Income / Threshold = $36,500 / $33,148 = 1.10 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 - $33,148 = $3,352 ConclusionSince Family A’s total income was greater than their poverty threshold, they are considered not “in poverty” according to the official definition. For information on confidentiality protection, sampling error, nonsampling error, and definitions, see https://www2.census.gov/programs-surveys/cps/techdocs/cpsmar22.pdf [PDF - <1.0 MB]. The Census Bureau has reviewed this data product to ensure appropriate access, use, and disclosure avoidance protection of the confidential source data used to produce this product. Data Management System (DMS) number: D-0000010797, Disclosure Review Board (DRB) approval number: CBDRB-FY22-358. |