Chapter 7 Means Test in California: Income Limits and Exemptions

The Chapter 7 means test in California starts with a single comparison: your household’s annualized income against the state median for your family size. Come in under the median and you qualify for Chapter 7 without further scrutiny. Come in over, and you complete a detailed expense calculation on Form 122A-2 to determine whether the court presumes your filing is an abuse of the bankruptcy system. For cases filed between November 1, 2025, and March 31, 2026, a single filer passes the first gate at $77,221; a family of four passes at $135,505.

California Median Income Thresholds

Your “current monthly income” for means test purposes isn’t this month’s paycheck. It’s the average monthly income from all sources over the six full calendar months before your filing date, annualized.¹ That annualized figure gets compared to the California median for your household size:

1 person: $77,221
2 people: $100,161
3 people: $113,553
4 people: $135,505
Each additional person: add $11,100

The numbers come from Census Bureau data published by the U.S. Trustee Program and are updated roughly every six months, so confirm the current figures before you file.² Below the threshold, you pass. Everything else in this article only matters if you’re over.

What Counts as Income

Current monthly income includes wages, salary, tips, bonuses, commissions, rental income, business income, pension payments, unemployment compensation, and regular contributions anyone else makes toward your household expenses.¹ If a parent or partner regularly covers part of your rent or utilities, that counts even though it never touches your bank account.

The biggest exclusion is Social Security. Benefits under the Social Security Act — retirement, SSDI, survivor benefits — are completely excluded from the means test calculation. For retirees and disabled filers, that exclusion alone can drop countable income below the median. Social Security still appears on Schedule I when the court reviews your overall budget; it just doesn’t factor into the means test math. Military disability pay, certain combat-related compensation, and payments to victims of war crimes or terrorism are also excluded.¹

When Only One Spouse Files

If you’re married and filing alone, your spouse’s income still enters the initial calculation. California is a community property state, which makes this doubly relevant. Line 3 of Form 122A-2 provides a “marital adjustment” that lets you subtract the portion of your spouse’s income that doesn’t go toward household expenses or your dependents.³ If your spouse earns $3,000 a month but $800 covers their own student loans and separate tax debt, you can deduct that $800. Each expense has to be itemized on the form.

How the Full Calculation Works if You’re Over Median

Over-median filers move to Form 122A-2.⁴ The form doesn’t ask what you actually spend. It assigns standardized expense allowances based on IRS National and Local Standards, then measures what’s left over.

IRS Expense Standards

The IRS publishes national allowances for food, clothing, housekeeping supplies, personal care, and similar living expenses. These allowances are set by household size and apply the same anywhere in California.

Housing and transportation use local standards that vary by county, and in California those local numbers swing dramatically. The housing allowance for a single person in Marin County is $4,314 per month; in Modoc County it’s $1,549.⁵ Los Angeles County sits at $2,999 for a single filer, San Francisco County at $4,181. A Bay Area filer gets substantially larger deductions than one in the Central Valley, and that county difference can decide whether you pass or fail. Using the wrong county’s figures, or an outdated table, throws off the entire calculation.

Actual Expenses You Can Still Deduct

On top of the standardized allowances, Form 122A-2 allows deductions for certain real expenses: health insurance premiums, court-ordered payments like child support or alimony, mandatory payroll deductions beyond taxes, childcare, education expenses for dependent children under 18 (up to a capped monthly amount per child), and care expenses for elderly or disabled household members.⁴ Documentation matters — pay stubs, insurance statements, court orders.

Disposable Income and the Presumption of Abuse

The form subtracts every allowed deduction from your current monthly income, producing a monthly disposable income figure. Multiply that by 60 (a five-year repayment horizon), and the result determines whether the presumption of abuse arises:⁴

Below $9,075: no presumption of abuse. You pass and can proceed with Chapter 7.
Above $15,150: presumption of abuse. The court presumes you can afford a repayment plan.
Between $9,075 and $15,150: the court compares your 60-month disposable income to 25% of your total nonpriority unsecured debt. If disposable income is less than 25% of that debt, you pass. If it equals or exceeds 25%, the presumption kicks in.

These thresholds adjust periodically, with the next scheduled adjustment on April 1, 2025, and every three years after.⁴ Always pull the current form before you rely on any specific number.

Who Skips the Means Test Entirely

Some California filers don’t take the means test at all, regardless of income.

Disabled Veterans

If you’re a disabled veteran and your debts were incurred primarily while you were on active duty or performing a homeland defense activity, no form of means testing applies.⁶ You qualify with a disability rating of at least 30%, or if you were discharged because of a service-connected disability.

National Guard and Reservists

National Guard members and reservists called to active duty or performing homeland defense activities for at least 90 days after September 11, 2001, are exempt during the active duty period plus 540 days after release.⁶ File during that window and the test doesn’t apply. Claim the exemption with Form 122A-1Supp, filed alongside your income statement.⁷

Primarily Business Debt

The means test only applies when your debts are “primarily consumer” in nature. If more than half your total debt comes from business operations, professional investments, or similar non-consumer obligations, you’re exempt.⁸ Categorizing mixed-use debt takes care. A credit card that funded 60% business supplies and 40% groceries will draw scrutiny from the court.

Rebutting a Presumption of Abuse

Triggering the presumption doesn’t automatically end your Chapter 7 case. You can rebut it by showing “special circumstances” that make the standard calculation misleading.⁶ The statute names a serious medical condition or a military call to active duty as examples, and courts have recognized other situations where the six-month lookback doesn’t reflect the filer’s actual ongoing finances.

This is where most contested cases turn. Document the circumstance thoroughly and show there’s no reasonable alternative that would already account for it in the standard calculation. A one-time bonus that inflated your six-month average, a job loss that happened after the lookback ended, or recurring medical expenses beyond the IRS health care allowance are the kinds of facts that can carry the argument. Vague hardship claims without records won’t survive the U.S. Trustee’s review.⁸

What Happens if You Fail the Means Test

If the presumption stands and you can’t rebut it, the court or the U.S. Trustee can move to dismiss your Chapter 7 case or convert it to Chapter 13 (with your consent).⁶ Most filers who fail end up in Chapter 13, paying back a portion of unsecured debt over three to five years based on their disposable income.

Dismissal carries its own consequences. You cannot refile for 180 days if your case was dismissed because you failed to follow court orders, or if you voluntarily dismissed after a creditor sought relief from the automatic stay.⁹ A dismissed filing also stays on the court record and can complicate a later case. Address a likely failure before you file rather than after.

Timing Your Filing

Because the calculation uses a six-month income average, when you file often matters as much as how much you earn. A large bonus, a severance payment, or overtime-heavy months will inflate the average. Waiting until those months fall outside the six-month window can drop your calculated income below the California median.

The reverse also applies. If you recently lost a job or had hours cut, filing right away keeps the higher-income months in the average; waiting lets a lower-income stretch replace them. The statute explicitly uses a backward-looking average, so courts expect filers to understand how the window works. That said, creditor lawsuits, wage garnishments, and other pressures may not give you the room to wait for the optimal filing date.

1
Office of the Law Revision Counsel. 11 USC 101 – Definitions
2
United States Department of Justice. Median Family Income Based on State/Territory and Family Size
3
United States Bankruptcy Court Central District of California. Official Form 122A-2 – Chapter 7 Means Test Calculation
4
United States Courts. Official Form 122A-2 – Chapter 7 Means Test Calculation
5
Internal Revenue Service. Allowable Living Expenses Housing Standards
6
Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
7
United States Courts. Official Form 122A-1 – Chapter 7 Statement of Your Current Monthly Income
8
United States Courts. Chapter 7 – Bankruptcy Basics
9
Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor