The poverty threshold, or poverty line, is the level of income below which one cannot afford to purchase all the resources one requires to live. People who have an income below the poverty line have no discretionary disposable income, by definition. The official or common definition of "poverty line" in developed nations like the United States is much higher than in the Third World.

It is widely discussed how and where to set the poverty threshold. In practice, different countries often use different poverty thresholds. Globally, however, it is more common to use only one poverty threshold in order to compare economic welfare levels. When comparing poverty across countries, the purchasing power parity exchange rates are used. These are used because poverty levels otherwise would change with the normal exchange rates. Thus, 'living for under $1 a day' should be understood as having a daily total consumption of goods and services comparable to the amount of goods and services that can be bought in the U.S. for $1. Self-produced goods and public services are included in this measure.

Almost all societies have some citizens living in poverty. The poverty threshold is useful as an economic tool with which to measure such people and consider socioeconomic reforms such as welfare and unemployment insurance to reduce poverty.

Determining the poverty line is usually done by finding the total cost of all the essential resources that an average human adult consumes in one year. This approach is needs-based in that an assessment is made of the minimum expenditure needed to maintain a tolerable life. This was the original basis of the poverty line in the United States, whose poverty threshold has since been raised due to inflation. In developing countries, the most expensive of these resources is typically the rent required to live in an apartment. Economists thus pay particular attention to the real estate market and housing prices because of their strong influence on the poverty threshold.

Individual factors are often used to handle various circumstances, such as whether one is a parent, elderly, a child, married, etc.