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What is the Federal Poverty Level, Anyway?

What is the Federal Poverty Level, Anyway?

The Federal Poverty Level (FPL) is critically important to low income Americans because this number dictates the eligibility requirements for many federal programs. For many programs, you have to earn a certain percentage of it in order to qualify.

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In this article, we will review everything you need to know about the Federal Poverty Level. We will review what it is, how it is calculated, why it’s important, and what the current FPL figures are at a variety of percentages.

What is the Federal Poverty Level?

The Federal Poverty Level (FPL) is the officially declared threshold for poverty in the United States. This figure was developed by the U.S. government to establish consistent income thresholds for federal programs and benefits.

Many nonprofits and charities use the FPL as a standard for eligibility as well. It isn’t just the government that relies on this number. It is used throughout the country for a variety of different programs. For example, many breast cancer support services that provide grants will only approve you if you earn less than 500%, or five times, the FPL.

This number is often called the poverty line or Federal Poverty Guideline (FPG) as well.

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How is the Federal Poverty Level Calculated?

The Federal Poverty Level (FPL) is based on how much a family needs to earn in order to cover basic necessities, such as housing, food and utilities. Every year, the number is adjusted for inflation to reflect the actual cost of living.

Because the cost of living varies so drastically in Alaska and Hawaii, they have separate Federal Poverty Levels than the remaining 48 states.

The original formula for calculating the FPL is surprisingly simple. It was calculated based on the U.S. Department of Agriculture’s Economy Food Plan, because it was believed that this was the minimum amount of money a family would need to spend to have a nutritionally adequate diet. This amount was then multiplied by three, based on the assumption that a family spends a third of its income on food.

This poverty threshold is updated annually to account for inflation using the Consumer Price Index for All Urban Consumers (CPI-U). However, this calculation methodology has been the subject of critique for not fully capturing the modern expenses and financial challenges faced by families, as many households spend far less than a third of their income on food today.

There are different levels of the FPL to account for family size, with the threshold increasing for each additional family member. For example, in 2023, the FPL for a family of four was $30,000 in the contiguous United States and D.C.

What is the Federal Poverty Level in 2023?

The Federal Poverty Level for 2023 is listed in the chart below. These figures are valid from April 1, 2023, through March 31, 2024.

For the Contiguous 48 States & Washington DC

Household SizeFederal Poverty Level130% FPL160% FPL200% FPL250% FPL300% FPL500% FPL
1$14,580$18,954$23,328$29,160$36,450$43,740$72,900
2$19,720$25,636$31,552$39,440$49,300$59,160$98,600
3$24,860$32,318$39,776$49,720$62,150$74,580$124,300
4$30,000$39,000$48,000$60,000$75,000$90,000$150,000
5$35,140$45,682$56,224$70,280$87,850$105,420$175,700
6$40,280$52,364$64,448$80,560$100,700$120,840$201,400
7$45,420$59,046$72,672$90,840$113,550$136,260$227,100
8$50,560$65,728$80,896$101,120$126,400$151,680$252,800
for each additional person$5,140$6,682$8,224$10,280$12,850$15,420$25,700

Alaska

Household SizeFederal Poverty Level130% FPL160% FPL200% FPL250% FPL300% FPL500% FPL
1$18,210$23,673$29,136$36,420$45,525$54,630$91,050
2$24,640$32,032$39,424$49,280$61,600$73,920$123,200
3$31,070$40,391$49,712$62,140$77,675$93,210$155,350
4$37,500$48,750$60,000$75,000$93,750$112,500$187,500
5$43,930$57,109$70,288$87,860$109,825$131,790$219,650
6$50,360$65,468$80,576$100,720$125,900$151,080$251,800
7$56,790$73,827$90,864$113,580$141,975$170,370$283,950
8$63,220$82,186$101,152$126,440$158,050$189,660$316,100
for each additional person$6,430$8,359$10,288$12,860$16,075$19,290$32,150

Hawaii

Household SizeFederal Poverty Level130% FPL160% FPL200% FPL250% FPL300% FPL500% FPL
1$16,770$21,801$26,832$33,540$41,925$50,310$83,850
2$22,680$29,484$36,288$45,360$56,700$68,040$113,400
3$28,590$37,167$45,744$57,180$71,475$85,770$142,950
4$34,500$44,850$55,200$69,000$86,250$103,500$172,500
5$40,410$52,533$64,656$80,820$101,025$121,230$202,050
6$46,320$60,216$74,112$92,640$115,800$138,960$231,600
7$52,230$67,899$83,568$104,460$130,575$156,690$261,150
8$58,140$75,582$93,024$116,280$145,350$174,420$290,700
for each additional person$5,910$7,683$9,456$11,820$14,775$17,730$29,550

Why is the Federal Poverty Level important?

It is very important for low income Americans to understand what the Federal Poverty Level is and how it applies to you. This guide is used to determine your eligibility for many different assistance programs, including:

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History of the Federal Poverty Level

The origin of the FPL dates back to the 1960s, during the War on Poverty declared by President Lyndon B. Johnson. Mollie Orshansky, an economist working for the Social Security Administration, developed the thresholds that would eventually become the FPL.

Before the 1960s, there wasn’t an official statistical measure of poverty in the United States. This made it hard to gather data, which in turn made it difficult to study the problem of poverty or measure effective solutions to alleviate it.

When President Johnson declared war on poverty, the government needed a way to measure poverty. As a statistician with the Social Security Administration, Mollie Orshansky developed the formula for a poverty threshold. She based it on the price of food and set it at approximately three times the cost of the economy food plan.

In 1965, Orshansky’s poverty level calculation was adopted by the federal government as the official poverty measurement. The government began updating those calculations in 1970 to account for rising inflation.

However, since the mid-1990s, critics have complained that the price of food does not accurately reflect poverty in the United Stats. There have been many campaigns to incorporate other costs, such as housing or medical care, to better reflect the cost of living in the United States.

Benefits of the Federal Poverty Level

The Federal Poverty Level provides a few specific benefits to the federal government. Having a dedicated, standardized poverty measure makes it easier to make policy decisions, because you can quantify and study poverty in a way that would be much more difficult without standard definitions.

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This figure makes it easy to create uniform social assistance programs, develop policies that can help alleviate poverty, and measure the success of those programs.

Criticisms of the Federal Poverty Level

Although having a standard figure for poverty is convenient for the government, many organizations have criticized the FPL because it does not adequately reflect poverty in America. There are several key problems with this measurement that have rendered it increasingly ineffective in recent years.

Outdated Assumptions

The entire FPL calculation is based on the assumption that food consumes one-third of a household’s budget. This does not necessarily reflect the current economic reality.

Critics believe that housing and health care costs should influence the FPL as well, since those costs are often much higher than food costs for low income families.

No Geographic Considerations

Aside from the outlying regions of Alaska and Hawaii, there are no geographic considerations in the Federal Poverty Level. The FPL defines the poverty threshold identically the same in downtown San Francisco and rural Mississippi but the cost of living varies widely between those two areas.

This is a primary reason why more and more programs are favoring the Area Median Income instead. That figure does take geographic regions into account.

Does Not Reflect Cost of Living

Because the FPL only looks at food costs, it does not take into account the rising cost of other expenses like housing.

According to the US Census Bureau, the average cost of rent and utilities was just $71 per month in 1960. By 1970, it was around $108 per month. By contrast, the projected Fair Market Rent for 2023 is around $1,180. Housing costs have soared over the last several decades, a change that is not reflected by the Federal Poverty Level.

Summary

This article delves into the origin and impact of the Federal Poverty Level (FPL), a measure first developed in the 1960s by economist Mollie Orshansky. It discusses how the FPL, initially based on the cost of a minimum food diet multiplied by three, has since become a crucial tool in determining eligibility for federal assistance programs. Although the FPL has played a vital role in informing social policies and resource allocation, it has also faced criticisms for its failure to account for regional cost variations and contemporary economic realities. With the growing recognition of these limitations, the article explores ongoing discussions about adjusting the FPL to reflect a more nuanced understanding of poverty and economic struggle, to help shape more effective and targeted anti-poverty programs.

Paige

Thursday 30th of May 2024

The current poverty level is not realistic in the least! It seems like the government is out of touch with the costs of everyday living. If you add regular everyday costs to the costs of a disability, or emergency pop-ups like a new water heater, you are in financial distress! It is appalling to me that the richest country in the world (USA) does not give more benefits to citizens when most other countries have free health care. Non-registered immigrants get more than a citizen who needs help. In addition, it’s pathetic what pharmaceutical companies are doing with the cost of drugs. And don’t get fooled by the shell game ! Insulin goes down in price and other drugs go up in price to make up for the difference! “Federal Poverty Level” is outdated for the times!

Marcia

Saturday 30th of March 2024

A family of 4 making $30,000 pays out minimum 2,000 a month or more which leaves 6,000 for utilities, food, phone, a working car with needs and 2 children! They will be on the street. Around here $80,000 is no longer middle class. This isn't me by the way, I get 1,049 a month. Half goes to room rent in a tiny home (700 Sq ft) also paying utilities. I needed to leave a bad situation which almost left me on the street, got lucky! Another scenario is senior living ($1,050 a mth) impossible to find a vacancy and they want you to have 3x your monthly income 🤣

Catherine Marucci

Thursday 11th of January 2024

Hi. Here are some possible options. I hope one helps. https://lowincomerelief.com/free-home-repair-grants/ - Cat

Bonnie

Saturday 23rd of September 2023

I used to be considered middle class. Now since 2022, I am lower to low middleclass. But I cant get any assistace because theysay I get too much from SSA, HaHA. Been on it since 2015 when I retired. Necer had this much trouble. With everything double and tripling up except the paycheck, what is anyone suppose to do? the ceiling amount for low income still the same as 3-4 years ago. So unless you are dirt poor, you cant get any assistance for basics or some financial help. They need to drastically raise the poverty level so help can be given to more people who realy need help these days.

sharon malone

Tuesday 31st of January 2023

what is poverty level in Michigan 48198

Catherine Marucci

Wednesday 8th of February 2023

Hi Sharon. You should be able to find that info here: https://www.michbar.org/file/programs/atj/pdfs/povertyguidelines.pdf