Chapter 7 Allowable Living Expenses and the Means Test

Chapter 7 allowable living expenses are the deductions you subtract from your monthly income on the means test to decide whether you qualify for a discharge. They come in three groups: fixed IRS National Standards for food and household basics, IRS Local Standards for housing and transportation that vary by county and region, and a set of Other Necessary Expenses that you deduct based on actual documented costs. Your income minus these allowances produces the disposable-income figure the court uses to test for abuse under 11 U.S.C. § 707(b).

Check the Median Income First

If your household income is below the median for your state and family size, you pass the means test automatically and never calculate a single deduction. The U.S. Trustee Program publishes the thresholds, and they vary sharply by location. For cases filed on or after April 1, 2026, a single earner qualifies automatically below $53,978 in Mississippi but needs to be under $88,202 in Massachusetts. A four-person household qualifies below $117,962 in Texas and $168,127 in New Jersey.¹

Only if your income exceeds the median do the expense allowances actually matter. From there, you complete Official Form 122A-2.²

How the Deductions Fit Into the Means Test

Your “current monthly income” is your average gross income over the six full calendar months before filing. Subtract all allowed expenses. Multiply what remains by 60. The result is compared against two abuse thresholds under 11 U.S.C. § 707(b)(2): the lesser of 25 percent of your total unsecured debt (with a floor of $10,275) or $17,150.³

In practical terms, monthly disposable income under roughly $171 keeps you safe regardless of debt level. Above roughly $286 per month, the presumption of abuse applies. Between those numbers, it depends on how much unsecured debt you carry.

The statute recognizes three deduction categories: IRS National Standards, IRS Local Standards, and actual expenses for Other Necessary Expenses.³ The first two are flat lookup amounts you claim regardless of what you really spend. The third requires documentation.

National Standards: Food, Clothing, and Personal Items

The National Standards cover five basic categories as a single bundled monthly allowance: food, housekeeping supplies, clothing, personal care, and miscellaneous. Amounts depend only on household size, not location. Current totals:⁴

One person: $839
Two persons: $1,481
Three persons: $1,753
Four persons: $2,129
Each additional person beyond four: add $394

Food is the largest single piece ($497 per month for one person). The miscellaneous line ($154 for one person) absorbs basic phone, cell, and internet service, which are not part of the housing and utilities standard.⁵ You claim the full standard amount whether or not you actually spend it, and trustees rarely contest these figures.

The statute permits up to 5 percent extra on the food and clothing portions if you can show the additional amount is reasonable and necessary.³ For a single filer that’s about $30 a month, which can matter when you’re close to the abuse line.

Local Standards: Housing and Utilities

Housing and utility allowances vary by county and household size. They cover rent or mortgage, property taxes, homeowners’ insurance, and utilities like electricity, water, heating, and trash collection.⁶

The form splits housing into two pieces. First, you claim the full IRS Local Standard for your county and household size. Then you report your average monthly secured housing payment, calculated by totaling what’s contractually due over the next 60 months and dividing by 60. The form subtracts that figure from the standard to produce a “net” housing allowance covering utilities and insurance. Your actual secured mortgage payment then gets a separate deduction line, so nothing is lost.²

Basic home telephone, cell phone, and internet are explicitly excluded from the housing standard and fall under the National Standards miscellaneous line instead.²

Transportation

Transportation deductions have two separate pieces: operating costs and ownership costs.

Operating Costs

Operating allowances are regional, covering fuel, insurance, and maintenance. The current monthly allowance for one vehicle runs from $259 in the Midwest to $302 in the Northeast; doubled for two vehicles.⁷ You claim the amount regardless of actual spending. If you don’t own a vehicle, a separate fixed public transit allowance applies.

Ownership Costs

The ownership allowance is a national flat rate: $662 for one vehicle, $1,324 for two. The trap: you can only claim it if you’re actually making loan or lease payments. A paid-off car gets you the operating allowance but zero ownership deduction.⁸ With a loan, you deduct the lesser of your actual average monthly payment or the cap.

That average uses the 60-month method. If your car loan pays off in 30 months, you total the remaining 30 payments and still divide by 60, which can produce an average well below your real monthly payment. This hits auto loans harder than mortgages because the terms are shorter.

Secured Debt Payments and Priority Claims

Beyond the standard allowances, the form gives separate deduction lines for actual payments on secured debts and priority obligations.

For every secured debt — mortgage, auto loan, financed furniture — add up everything contractually due in the 60 months after filing and divide by 60.² A balloon payment landing inside that window goes into the total before you divide. When your actual average secured payment exceeds the IRS housing or vehicle ownership cap, you deduct the real amount on this separate line; the cap only limits the standard-deduction portion.

Priority debts, such as past-due income taxes and domestic support arrears that survive bankruptcy, get amortized the same way: total the priority claim and divide by 60 for your monthly deduction.

Other Necessary Expenses

The remaining deductions cover costs that fall outside the IRS standards but are reasonably necessary for health, safety, and the ability to earn a living. Most require documentation.³

Mandatory Payroll Deductions

Federal and state income tax withholding, Social Security, Medicare, and required union dues are fully deductible. Pay stubs are enough.

Health Care

The IRS out-of-pocket health care standard is $84 per person under age 65 and $149 per person aged 65 and older, claimed without receipts.⁹ If actual costs run higher because of a chronic condition or ongoing treatment, you can deduct the higher amount with medical and billing records to back it up. Health insurance premiums, disability insurance, and HSA contributions are deductible separately from the out-of-pocket standard.³

Court-Ordered Obligations and Term Life Insurance

Child support, alimony, and other court-ordered payments are fully deductible, as are term life insurance premiums. Bring the divorce decree, support order, or policy statement showing the current amount.

Education

Two education categories appear on the form. Expenses for a physically or mentally challenged dependent child where no comparable public education is available are deductible without a dollar cap. General education expenses for dependent children under 18 are capped at $189.58 per child per month.² Both require documentation.

Care for Elderly or Disabled Family Members

Actual expenses you pay for the care of an elderly, chronically ill, or disabled household or immediate family member who can’t afford the cost themselves are deductible. That reaches parents, grandparents, siblings, children, and grandchildren. Contributions to a qualified ABLE program for a dependent child, stepchild, grandchild, or stepgrandchild with disabilities also count, up to program limits.³

Protection Against Family Violence

Expenses incurred to maintain the safety of you and your family from domestic violence get their own line. Relocation, lock changes, protective order costs, and similar safety expenses qualify, and the court is required to keep their nature confidential.²

Charitable Contributions

Regular charitable giving counts as a deduction if you have an established pattern of contributing to a qualified religious or charitable organization. Starting donations the month before filing won’t work. Section 548 shields contributions up to 15 percent of your gross annual income from being treated as fraudulent transfers, and contributions above 15 percent can still be protected if they match your historical giving.¹⁰ Expect to show bank statements, canceled checks, or church records covering at least a year before you file.

Rebutting the Presumption of Abuse

If your deductions aren’t enough and the math says you fail, you can still rebut the presumption of abuse by demonstrating “special circumstances.” The statute names a serious medical condition and a call to active military duty as examples.³

To use the provision, you itemize each additional expense or income adjustment, document each one, submit a detailed written explanation of why the circumstances leave no reasonable alternative, and sign everything under oath. The additional expenses have to be large enough to pull your five-year disposable income total back below the abuse thresholds. Courts decide these case by case, so it isn’t a guaranteed exit, but it exists for situations the standardized boxes don’t fit.

Use the Numbers in Effect When You File

The IRS updates its National and Local Standards periodically, and the U.S. Trustee Program posts matching bankruptcy versions.¹¹ The figures that apply are the ones in force on your filing date, not the date you started your paperwork. The abuse-threshold amounts ($10,275 and $17,150 as of April 2025) are adjusted periodically, and median income tables roll over on a regular cycle. Pull the current standards from the U.S. Trustee or the IRS collection financial standards pages before completing Form 122A-2. The wrong county for your housing allowance, or last year’s transportation figures, can swing your result across the threshold.

1
United States Department of Justice. Median Family Income Data – On or After April 1, 2026
2
United States Courts. Official Form 122A-2 Chapter 7 Means Test Calculation
3
Office of the Law Revision Counsel. 11 US Code 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
4
Internal Revenue Service. National Standards: Food, Clothing and Other Items
5
Internal Revenue Service. Collection Financial Standards
6
Internal Revenue Service. Local Standards: Housing and Utilities
7
Internal Revenue Service. 2025 Allowable Living Expenses Transportation Standards
8
Internal Revenue Service. Local Standards: Transportation
9
Internal Revenue Service. National Standards: Out-of-Pocket Health Care
10
Office of the Law Revision Counsel. 11 US Code 548 – Fraudulent Transfers and Obligations
11
United States Department of Justice. Means Testing