The Minnesota Bankruptcy Means Test: 2026 Income Limits and How It Really Works

What the Means Test Is — and What It Isn't

If you've started researching bankruptcy, you've probably run into the phrase "means test" and felt a knot in your stomach. Many people assume it's a pass-or-fail exam that decides whether they're "allowed" to file. That's not how it works. The means test is simply a math worksheet Congress added to the Bankruptcy Code in 2005. Its job is to sort filers with primarily consumer debts into one of two paths: Chapter 7, where most unsecured debts are wiped out in a matter of months, or Chapter 13, where you repay a portion of your debts over three to five years.

The test has two steps, and most Minnesota filers never need the second one:

• Step one: the median income comparison. Your household income is compared to the median income for a Minnesota household of your size. If you're at or below the median, you pass. Done. No further math.
• Step two: the expense calculation. If your income is above the median, you complete a longer form that subtracts allowed living expenses, taxes, and certain debt payments from your income. What's left over — your "disposable income" — determines whether Chapter 7 is still available.

One more thing worth knowing up front: the means test generally applies only when your debts are primarily consumer debts. If your debts are mostly business debts, the means test may not apply at all. That's one of several details an attorney will check before you ever fill out a form.

Minnesota Median Income Limits for 2026

The Census Bureau median income figures used in the means test are updated regularly. For bankruptcy cases filed on or after April 1, 2026, the Minnesota medians are:

• 1-person household: $77,696 per year
• 2-person household: $98,328 per year
• 3-person household: $126,487 per year
• 4-person household: $149,882 per year
• Each additional person: add $11,100

So a family of five in Minnesota passes step one of the means test if annualized household income is at or below $160,982. These numbers change over time, so if you're reading this after a later adjustment, check the U.S. Trustee Program's current figures or ask an attorney for the numbers that apply to your filing date.

Notice that these thresholds are higher than many people expect. A two-earner Minnesota household can bring in over $98,000 a year and still be below the median for a family of two. Plenty of people who assume they "make too much" actually pass step one without any further analysis.

What Counts as Income: The 6-Month Lookback

The means test doesn't use your salary, your last tax return, or what you expect to earn next year. It uses something called current monthly income, which works like this:

• Add up almost all income your household received during the six full calendar months before the month you file.
• Divide by six to get a monthly average.
• Multiply by twelve to annualize it, then compare that number to the median table above.

For example, if you file in October, the lookback window is April 1 through September 30. Income received in October itself doesn't count, and neither does anything before April.

"Income" here is broad. It generally includes wages, overtime, bonuses, commissions, self-employment income, rental income, pension payments, unemployment in many cases, and even regular contributions that other people make toward your household expenses. Certain benefits — most notably Social Security benefits — are excluded by statute. Figuring out exactly what goes in and what stays out is a technical exercise, and it's an area where small mistakes can change the result.

The six-month window also means your means test result can change from one month to the next. If you earned heavy overtime in the spring but your hours were cut over the summer, filing a month or two later can drop high-earning months out of the calculation. This is one of the most common ways attorneys legally improve a client's means test picture: not by changing the facts, but by choosing the filing date carefully.

Common Misconceptions About the Means Test

"They use my take-home pay, right?"

No — and this trips up a lot of people. The median comparison uses gross income, before taxes and payroll deductions come out. If you compare your take-home pay to the median table, you'll get the wrong answer. Taxes and many payroll deductions are accounted for later, in step two, if you even get that far.

"I'm over the median, so I'm disqualified from Chapter 7."

This is the biggest myth of all, and it's false. Being over the median only means you move on to step two — the full expense calculation. Many above-median Minnesota filers still qualify for Chapter 7 once their allowed expenses, tax obligations, and secured debt payments are subtracted. Over the median is the start of a longer conversation, not the end of the road.

"Household size is just whoever is on my tax return."

Not necessarily. How you count household members can depend on who lives with you and how finances are shared, and courts have taken different approaches. Since each additional household member adds $11,100 to the Minnesota threshold, getting household size right matters a great deal.

"If I fail the means test, I can't file bankruptcy."

Also false. The means test only affects which chapter fits. Chapter 13 remains available, and for some people it's actually the better tool even when Chapter 7 is an option.

Step Two: Allowable Deductions in Plain English

If your income is above the median, the second form walks through categories of allowed expenses. In general terms, you may deduct:

• Standardized living expenses based on IRS national and local standards — amounts for food, clothing, housing, utilities, and transportation that are set by table, not by your actual spending in every category.
• Actual costs in certain categories, such as taxes, mandatory payroll deductions, health insurance, term life insurance, court-ordered payments like child support, and necessary childcare.
• Payments on secured debts, like your mortgage or car loan, which often make a major difference for homeowners.
• Certain other expenses, including some health care, care for elderly or disabled family members, and other items the form specifically allows.

After all of that is subtracted, the form tests whether your remaining monthly disposable income is low enough for Chapter 7. The exact dollar cutoffs adjust periodically, so treat this as the shape of the rule rather than a number to memorize. The point is this: an above-median paycheck with a Minnesota mortgage, a car payment, taxes, and health insurance can shrink to very little disposable income once the form is done.

If You Don't Pass: The Chapter 13 Path

If the math shows too much disposable income for Chapter 7, Chapter 13 is the usual alternative — and it's far from a consolation prize. In Chapter 13, you propose a repayment plan lasting three to five years. You keep your property, catch up on things like mortgage arrears, and pay unsecured creditors only what the plan requires — which in many cases is a fraction of what's owed. When the plan ends, remaining eligible unsecured debt is discharged.

The court filing fees are modest compared to the debt involved: currently $338 for Chapter 7 and $313 for Chapter 13, plus attorney fees, which vary. And whichever chapter you file, federal law requires you to complete a credit counseling session with an agency approved by the U.S. Trustee Program within 180 days before filing. The sessions are typically brief and can usually be done online or by phone.

Why Attorneys Routinely Find Qualifying Paths Filers Miss

People who run their own numbers often get the means test wrong in ways that hurt them. Experienced Minnesota bankruptcy attorneys look at things most filers never consider:

• Timing. Because of the six-month lookback, the same person can fail the test in one month and pass it two months later.
• Household size and composition, which directly moves the median threshold.
• Income that doesn't count, like excluded benefits, and one-time payments that may be treated differently than people assume.
• The marital adjustment, which in some cases lets a married person filing alone back out a non-filing spouse's separate expenses.
• Every allowable deduction in step two — standardized and actual — applied correctly.

None of this is about bending rules. It's about applying a complicated formula the way it was written. The means test rewards accuracy, and accuracy is exactly what a local attorney who handles these cases every week brings to the table.

MinnesotaBankruptcyLawyer.com is a Minnesota-based matching service, not a law firm or lawyer referral service. This article is general information, not legal advice. Attorneys who receive inquiries through this site are independent and solely responsible for the services they provide. Consult a licensed Minnesota attorney about your specific situation.