Waist measurements are taken at the natural waist, which falls below the ribcage and above the belly button. The waist can be identified by bending to the side; the crease that forms when bending is the site of the natural waistline.
When taking a waist measurement, make sure the measuring tape is level to the ground all the way around. Sucking in the stomach produces a false measurement. Some clothes have waistlines that do not fall at the natural waist; if measuring for this type of pattern, take the measurement along the garment's waistline as well as at the natural waist.