Poverty level income varies depending on the number of people residing in a home. The Federal poverty level is $23,850 for a family of four. The United States government uses a household's annual cash income to determine this amount, which does not include total wealth or annual consumption.
The reason it is so important to determine a national poverty level is so that those under the level can receive government aid in the form of welfare programs. The poverty level is readjusted each January by the Department of Health and Human Services to take inflation into account. Families just above the poverty level may also be eligible for Federal subsidies, such as the Affordable Care Act and Medicaid.