What Are IRS National Standards for Allowable Living Expenses?

The IRS National Standards for allowable living expenses are flat monthly dollar amounts, set by household size, that the IRS lets you deduct from your income when it decides how much you can afford to pay toward back taxes. You get the full amount automatically, without receipts, for a bundle of everyday costs: food, housekeeping supplies, clothing and services, personal care, and a miscellaneous catch-all. A separate National Standard covers out-of-pocket health care on a per-person basis. The figures published April 21, 2025 stay in effect through June 2026.¹

When the National Standards Apply

Not every taxpayer with a balance due goes through this analysis. If you owe $50,000 or less in combined tax, penalties, and interest and have filed all required returns, you can set up a streamlined installment agreement online without disclosing any expenses.² The IRS just splits the balance into monthly payments.

The standards come in when the math gets tighter: you owe more than the streamlined threshold, you’re asking to settle for less through an Offer in Compromise, or you’re claiming you can’t pay anything at all. In those cases the IRS calculates your “reasonable collection potential,” which is the gap between your income and your allowed expenses.¹ That gap is what the IRS expects you to send in each month.

Food, Clothing, and Household Items by Family Size

The main National Standard rolls five categories into a single monthly figure: food (groceries and eating out), housekeeping supplies (cleaning products, lawn and garden supplies, postage), apparel and services (clothing, shoes, dry cleaning, watch and jewelry repair), personal care (toiletries and cosmetics), and a miscellaneous allowance.³ The miscellaneous piece is a floor the IRS will not let you exceed under any circumstances.

The monthly totals by household size are:⁴

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

A household of six gets $2,129 plus $788, for $2,917 total. There is no cap on family size. Household members are counted the same way you count dependents on your most recent tax return.³

Out-of-Pocket Health Care

Separate from the food-and-clothing figure, the IRS allows a per-person monthly amount for out-of-pocket medical costs like copays, prescriptions, and supplies. Health insurance premiums are handled elsewhere and don’t come out of this allowance. The current per-person figures are:⁵

Under 65: $84 per month
65 and older: $149 per month

Two adults under 65 get $168 combined. If either spouse is 65 or older, their individual allowance rises to $149. As with the other National Standards, this comes without documentation. Higher amounts may be allowed with proof of the actual out-of-pocket cost.

Receipts, Documentation, and the Rule Above the Standard

The National Standards work in the taxpayer’s favor at or below the published amount. If your actual spending on food or clothing is lower than the standard, you still get the full standard as a deduction from your income. No receipts, no bank statements, no questions.³

Above the standard is where it tightens up. If you spend more than the published figure, you need documentation showing the extra amount is genuinely necessary for your family’s health and welfare. Preference isn’t enough. The miscellaneous portion of the standard cannot be exceeded at all.

What the National Standards Do Not Cover

Housing and transportation are not in these figures. Those fall under Local Standards, which vary by county and by region, because a mortgage in San Francisco doesn’t compare to one in rural Alabama. Housing rolls in rent or mortgage, property taxes and insurance, utilities, phone and cell service, cable, and internet. Transportation splits into a flat ownership allowance for a car payment and a regional operating cost figure for fuel, insurance, and maintenance. Both housing and transportation are capped at the lesser of your actual cost or the published local amount, and you can look up your specific figures on the IRS Local Standards pages.⁶⁷

Expenses Allowed at the Actual Amount

Some necessary costs sit outside both the National and Local Standards and are allowed based on what you actually pay, as long as they pass the IRS “necessary expense test” for health, welfare, or the ability to earn income.¹ There is no preset cap; you get what you can document. Common examples:

Payroll deductions you cannot opt out of, including federal, state, and local income tax withholding, Social Security and Medicare, and mandatory retirement contributions
Health insurance premiums, allowed separately from the out-of-pocket health care standard
Court-ordered child support and alimony, verified by the court order
Child and dependent care needed for you to work, such as daycare

Bank statements, pay stubs, and billing records are the usual proof.

What the IRS Will Not Allow

Many normal-looking expenses get zero credit in a collection analysis. Credit card minimum payments and student loan payments generally aren’t deducted from your income, because the IRS treats its own debt as ahead of unsecured creditors. Charitable donations, college tuition, private school fees, and whole or term life insurance premiums fall outside the allowed categories too.

There is one important exception, and it can rewrite the whole calculation.

The Six-Year Rule

If you can fully pay your tax debt, including projected penalties and interest, within six years and before your Collection Statute Expiration Date, the IRS will allow all reasonable expenses instead of holding you to the published standards.⁸ Under this rule, credit card minimum payments, student loans, college tuition, and similar costs can be factored in as long as the amounts are reasonable and the six-year timeline still works.⁹ You also don’t have to prove each expense meets the strict necessary-expense test.

A few conditions. You must stay current on future filings and payments during the agreement. The IRS won’t extend the full six years if the expenses look unreasonable. The rule doesn’t apply to businesses, partnerships, LLCs, or corporations.⁸

Timing matters. The IRS generally has 10 years from the assessment date to collect a tax debt.¹⁰ If you’re already seven years in, the six-year rule can’t help, because the IRS won’t agree to a plan that runs past the expiration date.

Which Form You File

When a full financial picture is required, the IRS uses a Collection Information Statement. Which version depends on the situation:

Form 433-A for wage earners and self-employed individuals filing Schedule C, the most detailed form and typically required for Offers in Compromise¹¹
Form 433-B for businesses organized as LLCs, partnerships, or corporations
Form 433-F, a shorter version used by IRS collection employees for less complex installment agreement cases¹²

Expect to send bank statements, pay stubs, loan statements, bills for recurring expenses, and prior tax returns. Every expense above a published standard needs backup. Every expense at or below the National Standards does not.

Getting the Full Allowance

Two practical points worth checking before you sign a payment plan based on the standard figures. First, claim every household member the IRS would recognize as a dependent. A four-person household gets $2,129 per month against $839 for one person, and each person beyond four adds $394.⁴ Second, don’t overlook the out-of-pocket health care standard. It’s separate from insurance premiums and adds up quickly across a family.⁵

Then run the six-year math. If your total balance, with projected interest and penalties, can be repaid within six years and before your Collection Statute Expiration Date, you may be entitled to keep all reasonable expenses rather than being squeezed to the published standards.⁸ That distinction alone can shift the monthly payment by hundreds of dollars.

1
Internal Revenue Service. Collection Financial Standards
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Internal Revenue Service. Payment Plans; Installment Agreements
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Internal Revenue Service. National Standards: Food, Clothing and Other Items
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Internal Revenue Service. 2025 Allowable Living Expenses National Standards
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Internal Revenue Service. 2025 Allowable Living Expenses Health Care Standards
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Internal Revenue Service. Local Standards: Housing and Utilities
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Internal Revenue Service. Local Standards: Transportation
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Internal Revenue Service. 5.14.1 Securing Installment Agreements
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Internal Revenue Service. 5.15.1 Financial Analysis Handbook
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Internal Revenue Service. 5.1.19 Collection Statute Expiration
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Internal Revenue Service. Form 433-A Collection Information Statement for Wage Earners and Self-Employed Individuals
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Internal Revenue Service. Form 433-F Collection Information Statement