Premium tax credit 2026: the 400% income limit is back and excess advance credit must be repaid in full

What changed for the premium tax credit in 2026?

The premium tax credit (PTC) helps pay for health insurance bought through the Health Insurance Marketplace. For 2021 through 2025, Congress temporarily removed the 400% income ceiling and lowered the share of income people were expected to pay. That expansion ended with 2025. Publication 505 for 2026 lists two changes that apply from 2026: households above 400% of the federal poverty line are no longer eligible, and there is no longer a limit on how much excess advance credit you pay back, even if your income is below 400%.

The repayment change comes from the 2025 tax law, Public Law 119-21, which IRS pages now call the Working Families Tax Cuts Act. As of October 20, 2026, IRS guidance still applies both rules to 2026 coverage, and the enhanced 2021 to 2025 credit has not been restored.

What is the income limit for the premium tax credit in 2026?

Household income generally has to be at least 100% and no more than 400% of the federal poverty line for your family size. For 2026 coverage the Marketplace and Form 8962 use the poverty guidelines published in 2025, because HealthCare.gov uses income from the previous year's table to calculate savings for the next year. The table shows the lines for the 48 contiguous states and the District of Columbia; Alaska and Hawaii have higher figures.

Household income is your modified AGI plus that of every family member who must file a return. Modified AGI adds back tax-exempt interest, Social Security benefits that are not taxed and excluded foreign income, according to the IRS questions and answers on the credit. Pre-tax 401(k) and HSA contributions lower AGI, so they also lower household income.

Income is not the only test. The IRS eligibility rules also require that:

• You or a family member enrolled in a plan through the Marketplace for at least one month.
• The person enrolled was not eligible for Medicare, Medicaid, TRICARE or affordable employer coverage that provides minimum value. For 2026, employer coverage counts as affordable when the required contribution is no more than 9.96% of household income.
• You do not file as married filing separately, except for certain victims of domestic abuse or spousal abandonment.
• Nobody else can claim you as a dependent.

How much is the premium tax credit in 2026?

The credit is the premium for the second lowest cost silver plan available to you through the Marketplace (the benchmark plan), minus an expected contribution that is a percentage of your household income. It can never be more than the premium of the plan you actually enroll in. The percentage rises with income, under the 2026 table in Rev. Proc. 2025-25:

Worked example: a single person with household income of $50,000 is at 319% of the $15,650 poverty line, so the expected contribution is 9.96%, or $4,980 for the year. Assume the benchmark silver plan in their area costs $8,400 a year ($700 a month). The credit is $8,400 minus $4,980, which is $3,420. If they pick a cheaper plan costing $3,000, the credit is limited to $3,000.

What is the 400% subsidy cliff in 2026?

Because the credit stops completely above 400% of the poverty line, a small amount of extra income can cost the whole credit. Keep the same single person and the same $8,400 benchmark plan:

• At $62,600 of household income, exactly 400%, the expected contribution is $6,234.96 and the credit is about $2,165.
• At $63,000, about 402%, the credit is $0. Earning $400 more costs about $2,165 of credit.

Do you have to pay back the premium tax credit in 2026?

You pay back whatever part of the advance credit you were not entitled to. Advance payments are based on the income you estimated when you enrolled. When you file, Form 8962 recomputes the credit with your actual income. If the advance payments were less than the credit, you get the difference as a refundable credit. If they were more, the excess is subtracted from your refund or added to your balance due.

For tax years before 2026, the excess was capped for households below 400% of the poverty line: from $375 to $3,250 under the 2025 Form 8962 instructions, depending on income and filing status. The IRS says that for tax years after 2025 there is no repayment cap, and you repay the full amount.

If advance credit was paid for anyone in your tax family, you must file a return with Form 8962 even if you would not otherwise have to file. The IRS warns that skipping it makes you ineligible for advance credit in future years. You need Form 1095-A from the Marketplace, which should arrive by early February.

How to avoid a large premium tax credit repayment

1. Report changes to the Marketplace promptly. The IRS lists changes in income, address, employment, other coverage, births and adoptions, and marriage or divorce. The Marketplace then adjusts the advance credit.
2. Estimate income generously. Include raises, bonuses, self-employment profit, capital gains and retirement withdrawals.
3. Take less than the full advance credit. The IRS lets you have all, some or none of the estimated credit paid in advance; any credit you leave unclaimed during the year comes back on Form 8962 if your income ends up as estimated.
4. Set money aside or adjust withholding. A larger withholding amount on Form W-4, or an estimated tax payment, covers a repayment you can see coming.
5. Lower modified AGI if you are near 400%. Pre-tax 401(k) contributions, deductible traditional IRA contributions and HSA contributions reduce the income Form 8962 uses.

The premium tax credit sits alongside the other changes on 2026 returns listed in our tax changes 2027 overview. To see how a repayment changes your refund, run your figures through the tax refund calculator and add the repayment to the tax line.

What about the premium tax credit for 2027 coverage?

The same structure carries into 2027: no credit above 400% of the poverty line and no repayment cap. Two inputs change. Plans for 2027 use the newer poverty guidelines, which HealthCare.gov lists as $15,960 for one person and $33,000 for a family of four (Alaska and Hawaii are higher), so the 400% line rises to $63,840 for one person and $132,000 for four. And Rev. Proc. 2026-26, published in July 2026, raises every expected contribution percentage:

For 2027, employer coverage counts as affordable when the required contribution is no more than 10.22% of household income. With the same $8,400 benchmark premium used above, for illustration only, a single person with $50,000 of 2027 household income (313% of $15,960) would be expected to pay 10.22%, or $5,110, leaving a credit of $3,290, which is $130 less than for 2026. Benchmark premiums change every year, so rely on the Marketplace's own estimate when you enroll and update it as your income changes.