Homestead Exemption Amounts: Federal Cap, State Limits, and Wildcards

The federal homestead exemption amount is $31,575 in home equity per person, in effect from April 1, 2025 through March 31, 2028.¹ That’s the headline number, but it’s not necessarily the number that applies to you. Roughly 32 states have opted out of the federal system, forcing residents to use state exemption amounts instead, and those state figures run from unlimited protection down to as little as $5,000.² Where you live decides more than any other factor.

The Federal Amount

An individual filer using the federal exemption can protect up to $31,575 in home equity. Married couples filing jointly can each claim the full amount, protecting up to $63,150 in combined equity.¹ The Judicial Conference of the United States adjusts these figures every three years to account for inflation.²

The federal system is only available in the states that haven’t opted out. In those states, filers choose between the federal amount and their state amount and use whichever protects more. In opt-out states, only the state amount is on the table.²

How State Amounts Compare

State homestead exemptions cover an enormous range. Texas and Florida are among the states that offer unlimited homestead protection, meaning equity is fully shielded whether it’s $50,000 or $5 million, as long as the property fits within acreage limits. Most unlimited-exemption states cap qualifying property at roughly one acre in a city and 160 acres in a rural area.

A few states cap protection at only $5,000, where a homeowner with real equity faces a serious risk of losing the property in bankruptcy. Most states sit in between, with exemptions from $25,000 to $500,000 or more. The differences roughly track local housing costs, though not always cleanly. Two people with identical finances on opposite sides of a state line can end up with very different outcomes.

Doubling for Married Couples

Many states let married joint filers double the exemption, the same way the federal system does. Others cap the amount per household rather than per person, so a couple gets no more than a single filer. Some states allow doubling only when both spouses appear on the title or both are named as debtors. Check your state’s rule and your ownership structure before assuming the amount doubles.

How Equity Is Measured Against the Amount

The exemption applies to your equity, not your home’s value. Start with the current fair market value and subtract everything owed against the property: the remaining mortgage balance, any home equity line of credit, and any recorded liens such as tax liens or contractor liens. What’s left is your equity.

Bankruptcy courts generally let you take the math one step further and subtract estimated selling costs from the fair market value before determining equity. Realtor commissions, closing costs, and the trustee’s fee all reduce the figure. A home that would sell for $300,000 with a $250,000 mortgage and roughly $25,000 in selling costs produces about $25,000 in equity for exemption purposes, not $50,000. That difference can be enough to keep the home out of the trustee’s hands entirely.

Federal Caps That Override State Amounts

Two federal caps can shrink a state amount that would otherwise be generous or unlimited. Both matter most for filers in states like Texas and Florida.

The 1,215-Day Rule

Under 11 U.S.C. § 522(p), if you acquired your home less than 1,215 days (about three years and four months) before filing, your homestead exemption is capped at $214,000 regardless of what your state would otherwise allow.² Once you’ve owned the home longer than 1,215 days, the cap drops away and the full state amount applies.

The Fraud and Felony Cap

The same $214,000 cap applies if you’ve been convicted of a felony demonstrating abuse of the bankruptcy system, or if you owe debts arising from securities fraud or intentional misconduct that caused serious injury.² Your state’s amount is irrelevant in that situation.

Which State’s Amount You Can Claim

You can’t move to Florida on Monday and file bankruptcy on Tuesday to grab an unlimited exemption. To use a particular state’s exemption amount, you must have been domiciled in that state for at least 730 days (two years) before filing. If you fall short, the court looks back to where you lived for most of the 180-day period preceding that 730-day window and applies that earlier state’s exemptions instead.³ A recent move can leave you stuck with the exemption amount of a state you no longer live in.

The property has to be your primary residence when you claim the exemption. Vacation homes, rental units, and investment properties don’t qualify.

Stacking the Wildcard Exemption

Federal filers can add a wildcard exemption on top of the homestead amount. The base wildcard is $1,675, and if you haven’t used your full homestead exemption, you can redirect up to $15,800 of the unused portion into the wildcard.¹ The wildcard can be applied to a car, a bank account, or other property. It’s only available to filers using the federal system, so residents of opt-out states can’t touch it.

Debts the Amount Doesn’t Cover

Whatever amount your exemption reaches, several types of debt can bypass it entirely. Understanding this matters because a large exemption on paper isn’t the same as an untouchable home.

Mortgages and home equity loans. Any lender holding a security interest in the home can foreclose if payments stop. The exemption protects equity from unsecured creditors, not from the bank that holds the note.
Federal tax debts. The IRS is not bound by state homestead exemptions. A federal tax lien attaches to all property and rights to property, and state exemption laws do not apply to federal tax collection. The only property exempt from a federal tax lien is restricted Native American land held by the United States.⁴
Mechanic’s liens. A contractor who worked on the home and wasn’t paid can record a lien that attaches to the property and moves past the exemption.
Fraud and felony debts. Debts from securities fraud, intentional misconduct causing serious injury, or a felony showing bankruptcy abuse trigger the $214,000 federal cap regardless of state law.²

The federal tax point deserves emphasis. Filers in unlimited-exemption states sometimes assume the home is untouchable. Against most creditors, it is. Against the IRS, it isn’t.⁴

When Equity Is Higher Than the Exemption Amount

If your equity exceeds the available exemption, a Chapter 7 trustee can sell the home. You still receive your full exemption amount from the proceeds. The distribution runs in order: mortgage and liens first, then sale costs and the trustee’s fee, then your exemption, and only then unsecured creditors.

Trustees do the math before pulling the trigger. If the equity above the exemption is thin, commissions, closing costs, and the trustee’s fee can consume the potential recovery. A trustee who would net only a few thousand for creditors often abandons the property, and you keep the home even though the equity technically exceeded the exemption amount. Accurate appraisals and a realistic accounting of selling costs can shift that calculation.

In Chapter 13, you keep the home outright, but your repayment plan has to pay unsecured creditors at least what they would have received from a Chapter 7 sale. The nonexempt equity becomes the floor for your plan payments over three to five years, which can raise your monthly obligation substantially.

1
Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
2
Office of the Law Revision Counsel. 11 USC 522 – Exemptions
3
United States Bankruptcy Court Northern District of Florida. In re Meredith Lee Underwood, Case No. 06-30015-LMK
4
Internal Revenue Service. Federal Tax Liens