Who qualifies for the credit in 2026
Eligibility is a checklist, and income is only one line of it. The larger credits of 2021–2025 have expired, so 2026 coverage is back under the original income limits, measured against the prior year’s poverty guidelines.
A job-based offer blocks the credit only if it is affordable and meets minimum value. For 2026, it is affordable if the employee’s share of self-only coverage is no more than 9.96% of household income, and family members are tested against the employee’s cost for family coverage. Coverage from a former employer, such as COBRA or retiree coverage, can be turned down without losing the credit, but it blocks the credit for any month you are enrolled in it.
- Household income from 100% to 400% of the federal poverty level: $15,650 to $62,600 for one person and $21,150 to $84,600 for two.
- Coverage bought through the Marketplace for at least one month, with that month’s premium paid by your return’s due date.
- No eligibility for other coverage such as Medicare, Medicaid, TRICARE or an affordable employer plan.
- Married couples must file jointly, apart from certain victims of domestic abuse or spousal abandonment; filing separately otherwise rules it out.
- No one else can claim you as a dependent.
What counts as household income
Household income is the modified adjusted gross income of you and everyone in your tax family who is required to file a return. It starts from adjusted gross income and adds back excluded foreign income, the untaxed part of Social Security and tax-exempt interest. The result is that every dollar of Social Security and of municipal bond interest counts.
For people living on savings, what moves this number is which account the money comes from, not how much they spend.
- Raises it: wages, pensions, traditional IRA and 401(k) withdrawals, Roth conversions, interest, dividends and realized capital gains.
- Leaves it alone: spending cash savings, the cost basis of investments you sell, and qualified Roth IRA withdrawals.
- Lowers it: pre-tax 401(k) and deductible IRA contributions, and HSA contributions, all of which come off before AGI.
Advance payments and reconciling at tax time
Most enrollees take the credit in advance. The Marketplace estimates it from the income you expect, and the Treasury pays it to your insurer each month, which lowers your bill. You can instead pay the full premium and claim the whole credit on your return. Either way the credit is refundable: you receive it even if you owe no income tax.
Because the advance is only an estimate, the Marketplace sends Form 1095-A after the year ends, and you settle up on Form 8962. Anyone who received advance payments must file a federal return with that form. If your income came in lower than projected, the difference is added to your refund. If it came in higher, you repay the excess, and for tax years after 2025 there is no repayment cap: the whole difference is added to your tax bill.
Reporting income and household changes to the Marketplace during the year keeps that gap small, and so does extra withholding in a year with a large sale or conversion.
The 400% cliff and how to plan around it
Under 2026 rules the credit does not taper off at the top; it stops. One dollar of household income above 400% of the poverty level removes all of it, which for an older enrollee in a high-premium county can exceed $15,000 a year, as the example shows. Below the line the cost is gradual but real: in the 300%–400% band, each extra $1,000 of income cuts the credit by $99.60, a hidden 9.96% on top of your marginal tax rate.
That makes income timing a planning tool in the years before Medicare. Early retirees often draw on cash or a taxable account while on Marketplace coverage, and size Roth conversions and gain harvesting to stay under the line. If income lands just over it, a deductible IRA or HSA contribution made by the filing deadline can bring it back under, for anyone eligible to make one. Waiting until 65 isn’t a clean escape: IRMAA looks back two years, so income at 63 can raise Medicare premiums at 65.
The floor matters too. Income below 100% of the poverty level generally means no credit, so in a state that has not expanded Medicaid, a year with too little income can leave you without help.
Illustrative numbers
A 50-year-old in Monroe County, Florida, on each side of the 2026 cliff
- Benchmark silver premium
- Premium of the second-lowest-cost silver plan for the people covered, where you live
- Applicable %
- Your expected share of income: 2.10% to 9.96% for 2026, set by income as a share of the poverty level
- Household income
- Modified AGI of you, your spouse and any dependents required to file
- Your plan’s premium
- What the plan you actually enroll in costs
Figured month by month; for 2026 coverage there is no credit at all above 400% of the poverty level.
Benchmark silver premium, 2026 (CRS)$1,785 a month, or $21,420 a year
Household income$60,000, or 383% of the poverty level
Expected contribution: 9.96% × $60,000$5,976 a year
Premium tax credit: $21,420 − $5,976$15,444 a year, about $1,287 a month
Same person with $63,000 of incomeOver 400% of the poverty level: $0
Adding $3,000 of income, for example a slightly larger IRA withdrawal, would cost this person the entire $15,444 credit, more than five times the extra income. If the full advance had been paid all year, all $15,444 would be repaid at filing, with no cap for 2026.
At a glance
2026 applicable percentages by income (2025 poverty guidelines, 48 contiguous states and DC)
| Income as % of poverty level | Share of income toward the benchmark | One person | Two people |
|---|---|---|---|
| 100% to under 133% | 2.10% | $15,650–$20,814 | $21,150–$28,129 |
| 133% to under 150% | 3.14%–4.19% | $20,815–$23,474 | $28,130–$31,724 |
| 150% to under 200% | 4.19%–6.60% | $23,475–$31,299 | $31,725–$42,299 |
| 200% to under 250% | 6.60%–8.44% | $31,300–$39,124 | $42,300–$52,874 |
| 250% to under 300% | 8.44%–9.96% | $39,125–$46,949 | $52,875–$63,449 |
| 300% to 400% | 9.96% | $46,950–$62,600 | $63,450–$84,600 |
| Over 400% | No credit | Over $62,600 | Over $84,600 |
Put it in your plan
Premium tax credit in MoneyWhatIf
MoneyWhatIf estimates the advance credit from prior-return information, adjusted for events such as retirement and one-time income, then reconciles it against each year’s modeled income and repays any excess advance. ACA income adds back untaxed Social Security and tax-exempt interest, and the shipped 2026 rules use the 100%–400% eligibility window. The Taxes page’s tax map draws forfeiting the credit as a dashed cliff priced in dollars, and Tax Planning’s Preserve ACA switch stops a Roth conversion short of the 400% line.
Common questions
Premium tax credit FAQs
Did the enhanced premium tax credits expire?
Yes. From 2021 through 2025, temporary rules removed the 400% income limit and lowered the income shares, to zero for households from 100% to 150% of the poverty level. They expired after 2025, and the One Big Beautiful Bill Act did not extend them, so 2026 coverage follows the original rules: income shares of 2.10%–9.96% and no credit above 400%. The credit itself has no end date. Check HealthCare.gov for the rules that apply to 2027 coverage when you enroll.
Do Roth conversions reduce the premium tax credit?
Yes. A conversion is taxable income, so it raises household income, shrinks the credit and can push you over the 400% line. That doesn’t rule conversions out: a year with modest spending needs may leave room below the cliff. Size each conversion against both your tax bracket and the credit it costs, and remember that the lost credit acts like extra tax on the conversion.
Does Social Security count as income for the premium tax credit?
All of it does. Household income adds the untaxed part of your benefit back to AGI, so the full amount counts, unlike the provisional income test for taxing benefits, which counts half. Claiming Social Security early can therefore shrink or end a Marketplace credit, while delaying the claim keeps income lower in the years before Medicare.
What happens if I don’t file Form 8962?
If the Marketplace paid advance credits for anyone in your tax family, you must file a federal return with Form 8962 for that year, even if you would not otherwise need to file. If you don’t, you won’t be eligible for advance payments in later years, so you would pay each month’s full premium and wait until you file to claim the credit. Filing also settles the year: a lower final credit means repaying the difference, with no cap for 2026.