Chapter 7 Bankruptcy Income Limits in 2026: 4 Things You Need to Know

1. The income limits table lets you compare your income to the state median income for your household size.
2. If your situation is that simple, perhaps that's all you need. That said, part 2 provides Ascend's free bankruptcy income limit calculator that can estimate for you if your situation is more nuanced. For reference, 218,597 people have taken this free calculator in 2019.
3. What incomes are included in the means test.
4. I'll break down all 3 sections of the means test, including special handling of business debts and other nuances.

1. Bankruptcy Means Testing Median Income Limit Numbers

2. Chapter 7 Income Limits Bankruptcy Calculator

3. What Incomes Are Included in the Mean Test

Congress added an income limit for Chapter 7 when it revised bankruptcy laws in 2005. BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act) changed the way debtors qualified for bankruptcy discharge in Chapter 7. The purpose of this change was to prevent bankruptcy abuse by limiting Chapter 7 cases to individuals who could not afford to repay any portion of their unsecured debts.

Why Income Limits Are Important in Chapter 7 Cases

The income limits in Chapter 7 bankruptcy can prevent you from receiving a bankruptcy discharge if you file Chapter 7. The income limit for Chapter 7 does not prevent you from filing a Chapter 7 bankruptcy case. You can file for Chapter 7 regardless of how much money you earn.

However, if your income exceeds the Chapter 7 income limits, you may not be eligible to receive a bankruptcy discharge. In other words, your bankruptcy filing does not result in debt relief. The court can deny your bankruptcy discharge based on abuse. 

When your income exceeds the maximum income for Chapter 7 bankruptcy cases, you need to file under Chapter 13 to receive a bankruptcy discharge. The assumption is that if your income is higher than the maximum income for Chapter 7, you can afford to pay a percentage of what you owe to your unsecured creditors. 

Unsecured creditors do not have liens on your property. Examples of unsecured debts included credit cards, personal loans, deficiency balances and medical bills.

How to Calculate Income for the Chapter 7 Means Test

The first step is to gather proof of income for the past six months. Income for the Chapter 7 means test is based on income for the six months before you file your Chapter 7 cases. Therefore, if you file your Chapter 7 bankruptcy petition on July 15, you need to report all income from January 1 through June 30.  You can find the exact language to calculate income in this form of the bankruptcy means testing forms. 

Which Income is Included for the Chapter 7 Bankruptcy means test?

Income includes income earned and income received from all other sources, except income from the Social Security Act. Income received from Social Security retirement income, SSDI, and SSI is not included in income for the Chapter 7 Means Test.

Examples of income used for the Chapter 7 Means Test include:

• Wages and salaries, including overtime, bonuses, and commissions
• Net income from self-employment or operation of a business
• Net income from rental property
• Unemployment income
• Workers’ compensation income
• Interest, royalties, and dividends
• Annuities, retirement income, and pensions
• Private disability insurance income
• Child support and spousal support
• Regular income contributed by another person for household expenses, such as a non-filing spouse’s income and money from a roommate, domestic partner, parent, or friend

3. Sections of The Means Test

Section One – Median Income

There are two terms you need to understand when completing the first part of the Chapter 7 Means Test — current monthly income (CMI) and annual median income. The annual median income is based on your CMI. To calculate CMI, all income received during the six months before filing Chapter 7 and divided by six. Therefore, if your income for six months is $25,000, your current monthly income equals $4,166.67 ($25,000 divided by 6).

The annual median income is calculated by multiplying CMI by 12. In the example above, median income is $50,000.04 ($4,166.67 x 12). Your annual median income is compared to the annual median income for your state (see our chart below). If your median income is lower than the median income for your state, you are presumptively eligible for a bankruptcy discharge under Chapter 7. In other words, you can receive debt forgiveness in Chapter 7 if you meet the other government requirements for filing Chapter 7.  Please see the annual income calculator below to estimate your average income in 2025-2026.

Section Two – Statement of Exemption from Presumption of Abuse

There are certain provisions that may exempt you from the means test altogether. These are related to whether the debts are consumer-related and whether you are a disabled veteran or whether you are or have been a member of the National Guard or a Reservist. See the bankruptcy form, "Statement of Exemption from Presumption of Abuse Under §707(b)(2)" for more information.

Section Three – Disposable Income

In this section the court is going to look at how much money you actually have let after allowed expenses. This is where things get more detailed, it is normal to be confused about this part. I was too when I filed bankruptcy back in 2022. 

If you earn too much income to qualify for Chapter 7 under the median income test, you could see how to pass the Chapter 7 means test under the disposable income test. Disposable income is the amount of money you have each month after deducting your ordinary living expenses and mandatory payroll deductions. In Chapter 13 cases, you may have to include disposable income in your Chapter 13 plan. 

See the above median calculator below to see whether you may still qualify for a Chapter 7 bankruptcy even if your income exceeds the median income based on your household size and state.

• Required payroll deductions, such as payroll taxes, uniforms, union dues, and mandatory retirement savings
• Food, clothing, and household expenses
• Car payments, rent, lease payments, and mortgage payments
• Out of pocket health care costs
• Health insurance, term life insurance, and disability insurance premiums
• Childcare costs and school expenses for minor children
• Vehicle operating costs or public transportation costs
• Court-ordered child support or alimony payments

The expenses are based on how many people live in your home. Also, some monthly expenses are limited and based on national standards for living expenses. Some of your monthly expenses may not be used, such as expensive memberships to gyms or golf clubs. Also, if your expenses exceed “normal” amounts, you may need to justify and provide proof of the expense. For example, your health care costs are very high because your child has a disability.

Conclusion