How the 2026 premium tax credit works (and why the 400% cliff is back)
Quick answer
In 2026 the premium tax credit equals the price of your county's second-lowest-cost Silver plan minus a set share of your income, from 2.10% at the low end up to 9.96% between 300% and 400% of the poverty level. A single 40-year-old earning $45,000 in Harris County, Texas is expected to pay about $359 a month toward a $592 benchmark, so the credit is about $233 and the cheapest Bronze plan drops from $375 to about $142 (CMS plan file, August 4, 2026 snapshot). Above $62,600 for one person, or $128,600 for a family of four, the credit is zero.
The 2026 premium tax credit works by subtraction. The government looks up the price of the second-lowest-cost Silver plan where you live (the benchmark), works out how much of that it expects you to pay based on your income, and covers the difference. A single 40-year-old earning $45,000 in Harris County, Texas is expected to put about $359 a month toward a $592 benchmark, so the credit is about $233 a month, and it can be spent on any metal-tier plan in the county. Household income above 400% of the federal poverty level, which is $62,600 for one person in 2026, gets no credit at all. That last rule is new again this year.
This guide walks through each piece in order: the income table, the benchmark, how your age and county change the result, what happens over the line, and how the credit is settled at tax time. Every premium figure comes from the official 2026 plan file (CMS QHP Landscape PY2026, snapshot August 4, 2026), and how we price explains the method. To skip the reading and see your own number, the price comparison tool runs this calculation for your ZIP code and household.
Step one: your income as a percentage of the poverty level
Everything starts with household income measured against the federal poverty level for your household size. For 2026 coverage the government uses the 2025 poverty guidelines: $15,650 for one person, $21,150 for two, $26,650 for three and $32,150 for four in the 48 contiguous states and DC. A single person earning $45,000 is at about 288% of the poverty level; a family of four at the same income is at about 140%.
"Income" here means modified adjusted gross income, the figure from your tax return with a few items added back, such as tax-exempt interest and untaxed Social Security. It is not your gross pay. Pre-tax retirement contributions, HSA contributions and, for the self-employed, the health insurance deduction all lower it. The self-employed guide covers that last one in detail.
| Household size | 100% of poverty level | 138% (Medicaid line in expansion states) | 400% (tax-credit limit) |
|---|---|---|---|
| 1 | $15,650 | $21,597 | $62,600 |
| 2 | $21,150 | $29,187 | $84,600 |
| 3 | $26,650 | $36,777 | $106,600 |
| 4 | $32,150 | $44,367 | $128,600 |
| 5 | $37,650 | $51,957 | $150,600 |
| 6 | $43,150 | $59,547 | $172,600 |
2025 HHS poverty guidelines for the 48 contiguous states and DC, which apply to 2026 coverage (Alaska and Hawaii are higher). Source: 90 FR 5917 and IRS Rev. Proc. 2025-25.
Step two: the share of income you are expected to pay
Once your percentage is known, a table from the IRS sets the share of income you are expected to contribute toward the benchmark plan. For 2026 the table (IRS Revenue Procedure 2025-25) looks like this. Within each band the percentage rises smoothly from the low figure to the high one.
| Income, % of poverty level | Income, one person | Expected share of income |
|---|---|---|
| Up to 133% | up to $20,815 | 2.10% |
| 133% to 150% | $20,815 to $23,475 | 3.14% to 4.19% |
| 150% to 200% | $23,475 to $31,300 | 4.19% to 6.60% |
| 200% to 250% | $31,300 to $39,125 | 6.60% to 8.44% |
| 250% to 300% | $39,125 to $46,950 | 8.44% to 9.96% |
| 300% to 400% | $46,950 to $62,600 | 9.96% |
| Over 400% | over $62,600 | No credit |
IRS Rev. Proc. 2025-25 applicable percentage table for 2026; dollar figures use the 2025 HHS poverty guideline for one person in the 48 contiguous states.
Two things stand out. First, the percentages are higher than they were from 2021 through 2025, when the enhanced credits capped the expected share at 8.5% and set it at zero for the lowest incomes. Second, the table simply stops at 400%. Between 2021 and 2025 it kept going, so a household earning $150,000 could still get help if its benchmark was expensive. In 2026 it cannot.
Step three: the benchmark plan sets the size of the credit
The benchmark is the second-lowest-cost Silver plan available to your household in your county, priced for the ages of the people applying. The credit equals the benchmark premium minus your expected contribution, and it cannot go below zero. You do not have to buy the benchmark. The credit is a fixed dollar amount you can apply to any Bronze, Silver, Gold or Platinum plan sold on the Marketplace, though not to a catastrophic plan.
That design has a useful consequence. Because the credit is set by a mid-priced Silver plan, it often covers most or all of a Bronze premium. Here is a single 40-year-old in Harris County, Texas, where the benchmark is $592 a month and the cheapest Bronze plan is $375 at full price.
| Income | % of poverty level | Expected payment | Tax credit | Benchmark after credit | Cheapest Bronze after credit |
|---|---|---|---|---|---|
| $25,000 | 160% | $97 | $495 | $97 | $0 |
| $35,000 | 224% | $218 | $374 | $218 | $0 |
| $45,000 | 288% | $359 | $233 | $359 | $142 |
| $55,000 | 351% | $456 | $136 | $456 | $239 |
| $62,000 | 396% | $515 | $77 | $515 | $297 |
| $63,000 | 403% | n/a | $0 | $592 | $375 |
Monthly figures, one non-tobacco adult aged 40, Harris County, Texas. Premiums from the CMS QHP Landscape PY2026 Individual Medical file (snapshot August 4, 2026); credit from the IRS 2026 applicable percentage table. Rounded to the dollar.
Notice what stays the same and what changes. The expected payment depends only on income, so the benchmark plan always costs this person exactly that amount after the credit. The Bronze price after the credit is whatever is left once the credit is subtracted, and it can reach zero. At $35,000 the credit covers essentially all of the cheapest Bronze premium. The trade-off is a high deductible, which the Bronze, Silver or Gold guide weighs tier by tier.
There is also a quieter benefit at the lower end. If income is under 250% of the poverty level and you choose a Silver plan, cost-sharing reductions lower the deductible and copays on that plan automatically. That is the main reason a household around $25,000 to $35,000 for one person may want to look at Silver rather than defaulting to the free Bronze.
Why age and county change the credit so much
Your expected payment does not change with age or location. The benchmark does, and the credit absorbs the whole difference. Take the same $55,000 income in Harris County. A 40-year-old faces a $592 benchmark and gets a credit of about $136 a month. A 60-year-old faces a $1,257 benchmark, pays the same $456, and gets a credit of about $801. Their cheapest Bronze plan costs nothing after the credit. Older buyers under the line often see the largest dollar help on the Marketplace, which is why the guide for 60 to 64-year-olds spends so long on income planning.
County matters the same way. Here is one single 40-year-old earning $45,000, priced in four large counties.
| County | Silver benchmark | Expected payment | Tax credit | Cheapest Bronze after credit |
|---|---|---|---|---|
| Miami-Dade County, FL | $684 | $359 | $325 | $177 |
| Harris County, TX | $592 | $359 | $233 | $142 |
| Franklin County, OH | $538 | $359 | $179 | $219 |
| Maricopa County, AZ | $484 | $359 | $125 | $264 |
Monthly, one non-tobacco adult aged 40, $45,000 household income. CMS QHP Landscape PY2026 (snapshot August 4, 2026), each state's age-rating ratios, IRS 2026 applicable percentages.
The biggest credit does not always mean the lowest bill. Miami-Dade has the largest credit of the four but not the lowest Bronze price after it, because the gap between its benchmark and its cheapest Bronze plan is narrower than in Harris County. That is why you have to price the plans in your own ZIP code rather than rely on a state average. Try Harris County in the tool, or enter your own ZIP.
The low end: Medicaid and the coverage gap
The credit generally starts at 100% of the poverty level. In states that expanded Medicaid, such as Arizona and Ohio, adults under 138% are usually steered to Medicaid instead, so the Marketplace credit effectively starts at 138%. In states that did not expand, such as Texas and Florida, a single adult between 100% and 138% (about $15,650 to $21,600) qualifies for the credit at the 2.10% rate, which is why the cheapest Bronze plan is often free for them. Below 100% in a non-expansion state there is usually neither Medicaid nor a credit, a situation known as the coverage gap.
Over 400%: the cliff is back
In 2026 the credit ends abruptly at 400% of the poverty level: $62,600 for one person, $84,600 for two, $106,600 for three and $128,600 for four. In the Harris County table above, the 40-year-old's credit is $77 a month at $62,000 and nothing at $63,000. For an older buyer or a family, the drop is far larger. The 60-year-old in Harris County goes from about $743 a month of credit to none for a few hundred dollars of extra income. The 400% cliff guide shows what full price looks like for a family of four in five states and the ordinary ways households near the line keep their income under it.
The cliff exists because the enhanced credits that applied from 2021 through 2025 expired on December 31, 2025. If Congress passes a new extension, the table and the cliff could change, and this page will be updated when the plan data is refreshed.
Advance credit and the tax-time settle-up
Most people take the credit in advance: the Marketplace sends it straight to the insurer each month, based on the income you estimate when you apply. When you file your 2026 return, Form 8962 compares the advance credit with the credit you qualified for on your final income. If your income came in lower, you get the difference as a refund. If it came in higher, you pay back the excess.
Starting with tax year 2026, federal law under the 2025 budget reconciliation act no longer limits how much excess advance credit lower-income households have to repay, so an income estimate that comes in high can cost more than it used to. Two habits help: estimate income carefully, including side work and capital gains, and report a raise or a new job to the Marketplace during the year so the advance credit adjusts. Confirm how this applies to your own return with your tax professional.
Where private plans fit, honestly
For most households under 400% of the poverty level, the Marketplace with a tax credit is hard to beat, and it is always the right home for anyone with a pre-existing condition, because Marketplace plans cannot decline you or exclude a condition. Private plans sold outside the Marketplace receive no tax credit. They are medically underwritten, they are not ACA coverage, and a carrier can decline an application or exclude a condition.
Where private plans can make sense is above the cliff, or for a healthy household whose credit is small, such as the Maricopa County example above. In that situation the full-price Marketplace premium may be higher than what a healthy applicant is typically quoted privately, and our advisors can price both side by side. The comparison tool shows the Marketplace price after your credit and a private range in one view, so you can see whether the question is even worth asking.
Questions people ask
How is the 2026 premium tax credit calculated?
Take the monthly premium of the second-lowest-cost Silver plan in your county for your household, subtract your expected contribution (your income times the IRS applicable percentage for your poverty-level band, divided by 12), and the remainder is your credit. If the result is zero or negative, there is no credit. Above 400% of the poverty level there is no credit regardless of the benchmark price.
Do I get a tax credit at $50,000 as a single person in 2026?
Usually yes, because $50,000 is about 319% of the poverty level, under the $62,600 limit. You would be expected to pay 9.96% of income, about $415 a month, toward the benchmark. Whether that leaves a credit depends on your age and county: a 40-year-old in Harris County, Texas, where the benchmark is $592, would get about $177 a month, while a younger buyer in a lower-cost county might get little or nothing.
Can I use the tax credit on a Bronze plan?
Yes. The credit is calculated from a Silver plan but can be applied to any Bronze, Silver, Gold or Platinum plan on the Marketplace. Catastrophic plans are the exception. If the credit is larger than the Bronze premium, the premium is $0, though the higher deductible still applies.
Sources: CMS QHP Landscape PY2026 Individual Medical file (data.healthcare.gov, snapshot August 4, 2026) for Marketplace premiums and benchmarks; HHS 2025 poverty guidelines (90 FR 5917) and IRS Rev. Proc. 2025-25 for poverty-level limits and the 2026 applicable percentage table. Figures are monthly, non-tobacco and rounded, and can change before Open Enrollment. Tax rules summarised here are general information; confirm with your tax professional.