2025 2026 ACA Health Insurance Premium Tax Credit Percentages

For those who purchase medical insurance from healthcare.gov or a state-run ACA market, a tough cutoff for whether or not you qualify for a premium tax credit score will return in 2026. 2025 is the final 12 months that you could be nonetheless qualify for a premium tax credit score in case your revenue is above 400% of the Federal Poverty Degree (FPL). See The ACA Premium Subsidy Cliff After the 2025 Trump Tax Regulation.

Now, the quantity of tax credit score you qualify for is set by a sliding scale. The federal government says that primarily based in your revenue, you’re imagined to pay this share of your revenue towards a second lowest-cost Silver plan in your space. The federal government will deal with the remainder after you pay that quantity.

For those who choose a inexpensive coverage than the second lowest-cost Silver plan, you retain 100% of the financial savings, as much as the purpose you get the coverage at no cost. For those who select a costlier coverage than the second lowest-cost Silver plan, you pay 100% of the distinction.

The Sliding Scale

That sliding scale known as the Relevant Percentages Desk. The relevant percentages have been lowered considerably by way of the top of 2025. It decreased the quantity many individuals pay towards their ACA medical insurance. These percentages will go up in 2026.

Listed here are the relevant percentages for various revenue ranges in 2025 and 2026:

Supply: IRS Rev. Proc. 2024-35, Rev. Proc. 2025-25.

The proportion of revenue the federal government expects you to pay towards a second lowest-cost Silver plan is dependent upon your revenue relative to the Federal Poverty Degree. To calculate the place your revenue falls relative to the Federal Poverty Degree, please see Federal Poverty Ranges (FPL) For Reasonably priced Care Act (ACA).

Increased Marginal Tax Charge

In case your revenue is low, they anticipate you to pay a low share of your low revenue. As your revenue goes increased, they anticipate you to pay a better share of your increased revenue. The upper share applies not simply to the extra revenue however to your complete revenue. A increased revenue occasions a better share is rather more than a decrease revenue occasions a decrease share.

For instance, a family of two within the decrease 48 states incomes $50,000 in 2026 is predicted to pay 7.94% of their revenue towards medical insurance. In the event that they improve their revenue to $60,000, they’re anticipated to pay 9.46% of their revenue. The rise of their anticipated contribution towards ACA medical insurance and the corresponding lower of their premium tax credit score will likely be:

$60,000 * 9.46% – $50,000 * 7.94% = $1,709

This represents about 17% of the $10,000 improve of their revenue. For a married couple, the impact of paying 17% of the extra revenue towards ACA medical insurance is bigger than the impact of paying 12% towards their federal revenue tax. It makes the efficient marginal tax price on the extra $10,000 revenue 29%, not 12%.

Usually it’s a good suggestion to think about Roth conversion or harvesting tax beneficial properties within the 12% tax bracket, however these strikes turn out to be a lot much less engaging if you obtain a premium subsidy for the ACA medical insurance. For a useful software that may calculate this impact, please see Tax Calculator With ACA Well being Insurance coverage Subsidy.