Premium Tax Credit 2026
If you buy health insurance through the Marketplace, the premium tax credit can cut your monthly premium dramatically. But 2026 brought a big change: the enhanced subsidies expired, and the 400% poverty-line cliff is back. Here is what that means.
Income range
100%–400%
Of federal poverty level
Big change
Cliff is back
Enhanced subsidies expired
Credit type
Refundable
Lowers monthly premium
Where
Marketplace
Healthcare.gov
What the Premium Tax Credit Is
The premium tax credit (PTC) is a refundable credit that lowers the cost of health insurance bought through the Health Insurance Marketplace. You can take it in advance to reduce your monthly premium, or claim it at tax time. It is designed to cap premiums at a manageable share of income for lower- and moderate-income households.
See your income picture
Understand where your household income lands.
What Changed: The 400% Cliff Returns
From 2021 through 2025, enhanced subsidies removed the income cap — households above 400% of the federal poverty level (FPL) could still get help. Those enhancements expired at the end of 2025. For 2026, the historic 400% FPL cliff is back: households above that threshold generally lose the credit entirely.
That makes the cliff a sharp edge — a small income increase that pushes you just over 400% of FPL can wipe out a subsidy worth thousands, rather than phasing it out gradually.
Who Still Qualifies
- You buy coverage through the Marketplace (not an employer plan or Medicare/Medicaid).
- You are not offered affordable employer coverage.
- Your household income is between 100% and 400% of the federal poverty level.
- You file a tax return (married couples must file jointly, with limited exceptions).
How the Credit Is Calculated
The credit caps what you pay for a benchmark Silver plan at a percentage of your income — from roughly 2% at the low end up to about 8.5% as income rises toward the cliff. The lower your income (within the 100%–400% band), the larger the credit. Your exact credit depends on your household income, family size, and the cost of plans in your area.
Because it is reconciled on your tax return, an income change during the year matters: if you underestimated income and took too much advance credit, you may have to repay some of it.
Frequently Asked Questions
What happens if I earn just over 400% of the poverty line?
In 2026 you would generally lose the entire credit — the "cliff" effect. This is the key difference from the enhanced-subsidy years, when the credit phased out gradually above 400%.
Do I have to repay the credit if my income rises?
Possibly. The advance credit is reconciled on your return. If your actual income was higher than estimated, you may repay some or all of the excess credit.
Does a 401(k) contribution help me qualify?
Yes. The credit is based on modified adjusted gross income, so pre-tax contributions (401(k), traditional IRA, HSA) lower your MAGI and can keep you under the 400% threshold.
Can I get the credit if I have employer insurance?
Generally no, if the employer coverage is "affordable" and meets minimum value standards. You can still buy Marketplace coverage, but without the subsidy.
Sources
- IRS — Premium Tax Credit (PTC) eligibility and the 400% FPL threshold.
- Healthcare.gov — Marketplace subsidy rules.
- One Big Beautiful Bill Act — PTC recalibration for 2026.
This is informational, not tax or insurance advice. The 400% FPL dollar amount varies by household size — confirm your specific threshold with Healthcare.gov.