The share of American families devoting more than 40% of their income to debt payments rose to 8.6% in 2025, up from 6.5% in 2022, according to Federal Reserve survey results released on October 9.
The increase of 2.1 percentage points came alongside modest gains in inflation-adjusted family wealth. It shows how an improving balance sheet can coexist with greater pressure on the money available for everyday spending.
The 2025 Survey of Consumer Finances compares family finances with the previous survey in 2022. It is not a measurement of conditions in October 2026.
About 77% of families had some form of debt, little changed between surveys. Median and mean outstanding debt also remained broadly unchanged. The repayment burden nevertheless increased for a growing minority.
What the repayment measure tells us
A debt payment-to-income ratio compares payments on borrowing with income. It measures the flow of money needed to service debt, rather than the total amount owed.
The Fed’s measure uses reported before-tax income for the calendar year before the survey. It excludes rent and vehicle lease payments, so it should not be read as a complete measure of household living costs.
Among families carrying debt, the median payment-to-income ratio reached 15.4%, compared with 13.4% in 2022. The median is the midpoint, with half of those families above it and half below.
The full report says higher repayment burdens may be related to increased interest rates on mortgages and consumer loans. That is an explanation offered by the researchers, rather than proof that rates account for every family’s difficulties.
Wealth and income improved unevenly
Inflation-adjusted median family net worth rose 2% to $215,900 between 2022 and 2025. Mean net worth, the arithmetic average, increased 7% to about $1.24 million.
Net worth is the value of assets minus debts. It can include a home, retirement savings and investments, rather than money readily available in a bank account.
Median family income rose 7% to $82,200, while mean income fell 6% to $145,200. These income figures refer to 2021 and 2024, the calendar years preceding the respective surveys, and are expressed in 2025 dollars.
Averages therefore cannot establish whether a particular borrower has more room in their monthly budget. Different families own different assets, face different loan terms and have different income patterns.
Our earlier coverage of global wealth gains driven largely by asset valuations examines a related issue at a different scale. A higher value for something already owned does not necessarily provide additional cash or productive capacity.
Extra income does not all become spending
A separate Fed staff study released the same day examines a new survey question about an unexpected payment equal to one month of normal family income.
Respondents said that, on average, they would spend 22% over the following year, save 47% in assets and use 30% to repay debt. The percentages are rounded.
These are reported intentions about a hypothetical windfall, not observed purchases following a real payment. They cannot tell retailers exactly how much a future wage increase or government transfer would generate in sales.
They do, however, illustrate why additional income has several possible destinations. Paying down a loan can improve a family’s future finances without producing an immediate purchase of goods or services.
For businesses assessing consumer demand, the survey gives a reason to examine repayment commitments alongside income and wealth. A home can become more valuable while the owner still has less money left after the month’s bills.
