What Is Considered Low Income? - NerdWallet (2024)

FAQs

What Is Considered Low Income? - NerdWallet? ›

A widely used federal guideline defines low income as $14,580 annually for one person and $30,000 for a family of four. Hal M. Bundrick is a former NerdWallet personal finance writer.

The U.S. Department of Health and Human Services uses the Census Bureau threshold to determine who is eligible for certain government assistance programs, like SNAP (food stamps). Under their guidelines, a family of four is considered impoverished if they earn $30,000 or less per year.

Low-income earners (persons at risk of poverty) are considered those whose household's disposable money income per consumption unit (so-called equivalent income) is lower than 60 per cent of the equivalent median money income of all households.

The low-income category includes both the poor and the near poor.

Well, it depends. A $40,000 salary may be sufficient for an individual in a low-cost area, but it may not be enough for a family to live comfortably in most parts of the US. Rising inflation has made it more challenging to live on a $40,000 salary, but it still exceeds the poverty threshold for families.

These guidelines are adjusted each year for inflation. In 2023, the federal poverty level definition of low income for a single-person household is $14,580 annually. Each additional person in the household adds $5,140 to the total. For example, the poverty guideline is $30,000 per year for a family of four.

Where you rank by income. According to the Census Bureau's Income in the United States: 2022 report, the median household income is $74,580 (a 2.3% decline from 2021), while household income levels for each class level are as follows: Lower class: less than or equal to $30,000. Lower-middle class: $30,001 – $58,020.

Let's use 2021 poverty data from the Department of Health and Human Services (HHS) as an example. Using the official poverty measure, a family of four would be considered in poverty if their annual household income was $26,500 or less before taxes.

Low- income families have incomes below 200 percent of the federal poverty level (FPL). Moderate-income families have incomes between 200 and 300 percent of FPL. High-income families have incomes above 300 percent of FPL. a Includes full-time part-year, part-time full-year, and part-time part-year work.

What is the federal definition of low income? ›

§ 5302 to include a definition of “low-income individual” to mean “an individual whose family income is at or below 150 percent of the poverty line, as that term is defined in section 673(2) of the Community Services Block Grant Act (42 U.S.C.

Pew Research considers middle class to be $56,000 to $156,000 for families of three. Thus, a family of three on $20,000 is not middle-class; it's actually below the poverty level. While an individual on $20,000 a year is not below the poverty line, they are still not considered middle-class.

Passive income is earned with little or no effort, and individuals and companies often make it regularly, such as an investment or peer-to-peer (P2P) lending. The Internal Revenue Service (IRS) distinguishes it from earned income as money earned from an entity with which you have no direct involvement.

The official poverty rate in 2022 was 11.5 percent, with 37.9 million people in poverty.

No, $30,000 is not a good salary for a family with the cost of living in the United States. The poverty line for a family with four members is $26,200.

Statisticians say middle class is a household income between $25,000 and $100,000 a year. Anything above $100,000 is deemed “upper middle class”.

You also need an annual household salary of at least $50,000 to be considered middle class in 17 other states, including California, New York, Oregon, Washington, Utah and Hawaii.

Think You Couldn't Live On $30,000 A Year? Yes, You can! You typically can get by on $30,000 in annual take-home pay. But you would probably live more comfortably on that money in Kansas than in New York City—given the much lower cost of living.