Is the Federal Poverty Level Based on Gross Income?

Yes. The federal poverty level is based on gross income, meaning your total cash income before taxes are taken out. That covers wages, self-employment earnings (net of business expenses), Social Security, unemployment, pensions, interest, dividends, and most other cash flowing into the household on a regular basis.¹ One important exception applies: Medicaid and Affordable Care Act marketplace coverage use Modified Adjusted Gross Income instead, which can produce a noticeably different number.

What “Gross Income” Means for the Poverty Level

The Census Bureau, which builds the underlying thresholds that HHS turns into its annual guidelines, defines the measure as “money income before taxes.”¹ For an employee, that is essentially your pre-tax paycheck. For someone self-employed, it is net earnings: gross receipts minus ordinary business expenses.

Beyond earned income, several unearned income streams count as well. The Census Bureau’s list includes:

Social Security benefits
Supplemental Security Income (SSI)
Unemployment compensation
Workers’ compensation
Veterans’ payments
Pensions
Interest and dividends
Rental income
Alimony and child support
Public assistance payments

If cash is arriving in your household on a regular basis, it almost certainly counts toward the number used to measure poverty.¹

The reason for using a pre-tax figure is consistency. Tax burdens vary depending on where you live, how you file, and what deductions you claim. A pre-tax number strips those variables out and gives every household the same measuring stick.

What’s Left Out

Three broad categories stay outside the calculation. Noncash benefits such as SNAP allotments and government housing subsidies are excluded because they aren’t cash you can spend freely. Capital gains and losses are left out entirely. And refundable tax credits like the Earned Income Tax Credit don’t increase your income figure for poverty purposes.¹

Whose Income Gets Added Together

The poverty guidelines take two inputs: income and household size. Related family members living together count as one unit, and all of their incomes are combined against a single threshold. A spouse’s wages, a working teenager’s paycheck, and a grandparent’s Social Security all go into the same pot.¹

Unrelated roommates work differently. If you share an apartment with someone you aren’t related to, each person’s income is measured against their own individual threshold. Your roommate’s paycheck doesn’t count against you, and yours doesn’t count against them.¹ Sharing a lease is not the same as sharing a household for poverty-measurement purposes, and applicants get tripped up on this constantly.

The Medicaid and ACA Exception: MAGI

For Medicaid and marketplace health coverage, the number that matters is not raw pre-tax earnings. It is Modified Adjusted Gross Income, which starts with the adjusted gross income on line 11 of your tax return and adds back three items: untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.²

MAGI is often lower than gross income because adjusted gross income already reflects above-the-line deductions such as student loan interest, educator expenses, and traditional IRA contributions. It can also run higher than AGI alone when tax-exempt interest or non-taxable Social Security benefits get added back in.

For most people, MAGI ends up close to their AGI.² If you don’t have foreign income, municipal bonds, or non-taxable Social Security, MAGI and AGI are the same number. The distinction mainly matters for retirees drawing Social Security, people with tax-exempt bond portfolios, and Americans working abroad.

How Programs Apply the FPL to Your Gross Income

Almost no federal program draws its eligibility line at exactly 100 percent of the poverty level. Each program picks a multiplier, and each decides independently what income to count and how to define a household.³ A few common examples:

SNAP: Households generally must meet two tests. Gross monthly income cannot exceed 130 percent of the poverty level, and net monthly income (after deductions for housing, dependent care, and other expenses) cannot exceed 100 percent. For a single person in 2026, that means gross income under $1,696 per month and net under $1,305. Households with an elderly or disabled member only need to pass the net test.⁴
Medicaid expansion (adults): In states that adopted it, non-elderly adults qualify with household income up to 133 percent of the poverty level, and a built-in 5 percent income disregard effectively raises the cutoff to 138 percent. Income here is measured using MAGI.⁵
ACA marketplace premium tax credits: For 2026, eligibility phases out above 400 percent of the poverty level, which is $63,840 for a single person. Income is measured using MAGI.

SNAP shows why the short answer needs qualification. The gross income test uses your pre-tax cash income directly, but the net test allows deductions for shelter, child care, and medical expenses for elderly or disabled members. Households near the gross limit can still qualify once those deductions come out.⁴

Reporting Income on an Application

The most common mistake on benefits applications isn’t deliberate fraud. It’s honest confusion about which dollars to report. The safe default: report every cash income source before taxes, and let the agency apply the exclusions and deductions built into its rules.

Underreporting has real consequences. Agencies recoup overpayments by reducing future benefits or billing you directly. Intentional misrepresentation can bring disqualification: for SNAP, a first offense typically means a 12-month ban, a second means 24 months, and a third results in a lifetime ban. Criminal charges are possible in serious cases. Overstating income might cost you a benefit you were entitled to; understating it creates a liability that is harder and more expensive to fix.

1
United States Census Bureau. How the Census Bureau Measures Poverty
2
HealthCare.gov. Modified Adjusted Gross Income (MAGI) – Glossary
3
Federal Register. Annual Update of the HHS Poverty Guidelines
4
Food and Nutrition Service. SNAP Eligibility
5
Office of the Law Revision Counsel. 42 USC 1396a – State Plans for Medical Assistance