Congestion threshold is embedded in the congestion definition. Two basic approaches exist in current practice for setting the congestion threshold. One common approach uses the “free-flow” or unimpeded conditions as the congestion threshold. Another approach uses target or “acceptable” conditions. The limited research that has been conducted on the congestion threshold issue focuses on operational problems or policy debates, but relatively little investigation of the effect on decision-making for transportation investment and resource allocation. This research investigated the differences inherent in the threshold choices using detailed freeway data from seven metropolitan areas. Congestion performance measures of delay per mile, Travel Time Index and Planning Time Index were evaluated. This research specifically examined: 1) the ranking values of congestion measure for different congestion thresholds under a variety of real-world travel time distributions, 2) the relationship between change of congestion threshold and change of performance measure, and 3) the appropriateness of using speed limit as a congestion threshold choice by evaluating the peak and off-peak average speed changes in relation to a speed limit change in Houston, Texas. The rankings of congestion measures for freeway segments hold steady across the congestion thresholds ranging from 60 mph to 30 mph and across the congestion measures. From an investment point of view, the congestion threshold speed used is not a concern for funding allocation. The relationship between the delay values for an alternative threshold and the 60 mph threshold has a quadratic form. As the alternative threshold decreases further away from 60 mph, the increment is larger. The more congested a section is, the less the threshold affects measured congestion. For very congested sections, most of the delay is associated with speeds below 30 mph. The posted speed limit affects travel time distribution in the free flow driving condition but does not affect travel time distribution during congested driving conditions. However, if the speed limit or a percentage of speed limit is used to estimate the congestion, the amount of congestion may be underestimated because the free flow speed is higher than the speed limit.