IRS Collection Financial Standards: the living allowance the IRS uses

Where the standards come into play

Most people who owe never meet them. A balance within the Simple Payment Plan limit needs no financial statement, and the IRS's own standards page says that the vast majority of installment agreements its collection staff set up are of that kind. The standards apply when the IRS asks for Form 433-F, 433-A or 433-A (OIC): a larger plan, a partial payment agreement, a request for hardship status or an offer in compromise. Income minus the allowed total is what the IRS treats as available each month.

The figures come from federal surveys: the Bureau of Labor Statistics Consumer Expenditure Survey for the national items, the Medical Expenditure Panel Survey for health care, Census and BLS data for housing. Since 2024 the IRS has adjusted them with the Personal Consumption Expenditures index instead of the Consumer Price Index. They serve federal tax collection only; bankruptcy means tests use the U.S. Trustee Program's figures.

National standards: allowed as a flat amount

You get the total for your household size whatever you actually spend, and you need proof only to claim more. A household of six is allowed $2,970. The miscellaneous line is the catch-all: it covers credit card minimums, bank fees, school supplies and any spending above other standards that the IRS will not allow as a deviation, and it cannot itself be increased. The number of people is normally the number claimed on the latest tax return.

Health care and transportation

The out-of-pocket health standard is $90 a month for each person under 65 and $163 for each person 65 or older, for doctor visits, prescriptions and supplies such as glasses. It comes on top of health insurance premiums, which are allowed as paid. Elective procedures are generally excluded.

The transportation standards have two parts. Ownership covers a loan or lease payment, up to $703 for one car and $1,406 for two; with no payment, ownership is zero. Operating costs (fuel, insurance, repairs, registration, parking, tolls) depend on the census region or the metro area where you live. A single taxpayer is normally allowed one car. A household with no car gets $220 for public transportation without receipts.

Three details change the result more than people expect. A metro area is defined county by county in the IRS conversion chart, so two suburbs a few miles apart can fall under different operating figures; the calculator looks the county up for you. A household that owns a car and also rides a train to work can claim both, if both are needed for health, welfare or earning income, each at the lesser of the actual cost and its standard. And the operating figure excludes personal property tax on the vehicle, which goes instead on the current taxes line of the financial statement, together with income and payroll taxes actually withheld.

A Pittsburgh-area household of three

Allegheny County is not one of the metro areas on the IRS list, so its operating allowance is the Northeast regional figure. The family below pays $1,900 for rent and utilities, under the county housing standard of $2,192, so the full rent counts. Its two cars cost $350 a month in loan payments and $300 to run, both under their caps.

Going above the standards

The IRS may allow actual expenses when the standards leave a family without the means for basic living costs, but the taxpayer has to document why. A second route is the six-year rule: when a balance can be paid in full, penalties and interest included, within six years, the IRS can allow living costs above the standards and other payments such as minimum student loan or credit card payments, and it does not require proof of reasonable expenses. The rule was extended from five to six years in 2012. The housing figures by county are on the housing and utilities standards page. How a particular case is treated is the IRS's call; this page shows the published amounts and the arithmetic, not advice for your file.