The Premium Tax Credit for Tax Year 2026
The enhanced Premium Tax Credit or PTC provisions from previous years ended on December 31, 2025 and new legislation has not been passed for tax year 2026 (returns due in 2027). Without new legislation, the benchmark premium contribution percentages are higher again in 2026 (for example, the IRS affordability percentage used in related calculations rises to 9.96% for tax year 2026). Health insurance premiums for 2026 are expected to increase for many subsidized Marketplace enrollees compared with 2025. For more details see the section below.
What is the Premium Tax Credit?
Premium tax credits (PTCs) help low and moderate incomes families to pay for health insurance coverage premium payments for health insurance purchased via the Affordable Care Act or ACA, market place (e.g. healthcare.gov), or state sites. The PTCs enable individuals and families who don't obtain health coverage through their employers or other government programs (Medicare, CHIP) to purchase health insurance.
The PTC can be received in advance (advance PTCs, or APTCs) based on an individual’s estimated annual household income and then are reconciled through their tax return. Most marketplace enrollees receive premium tax credits (e.g. in 2025 93% or 20 million individuals).
2026 Income ranges to be eligible for the Premium Tax Credit
Premium tax credits eligibility in coverage for tax year 2026 is based on 2025 poverty FPL guidelines. An overview of the Federal Poverty Level or FPL 2025 data for coverage year 2026 or use this Federal Poverty Level calculator.
The FPL or federal poverty level income cap, which is set at 400%, has been reinstated. This means that individuals with higher incomes are no longer eligible for premium tax credits.
2025 Federal Poverty Level (FPL) Income Limits for Premium Tax Credit
| 1 Individual |
$15,650 |
$62,600 |
| 2 Individuals |
$21,150 |
$84,600 |
| 3 Individuals |
$26,650 |
$106,600 |
| 4 Individuals |
$32,150 |
$128,600 |
| 5 Individuals |
$37,650 |
$150,600 |
| 6 Individuals |
$43,150 |
$172,600 |
| 7 Individuals |
$48,650 |
$194,600 |
| 8 Individuals |
$54,150 |
$216,600 |
Note: The table below is a duplicate of the above table
| 1 Individual |
$15,650 |
$62,600 |
| 2 Individuals |
$21,150 |
$84,600 |
| 3 Individuals |
$ 26,650 |
$106,600 |
| 4 Individuals |
$32,150 |
$128,600 |
| 5 Individuals |
$ 37,650 |
$150,600 |
| 6 Individuals |
$43,150 |
$172,600 |
| 7 Individuals |
$ 48,650 |
$194,600 |
| 8 Individuals plus |
$ 54,150 |
$216,600 |
Required Taxpayer Contribution Percentage for 2026
| Less than 133% |
2.10% |
2.10% |
| At least 133% but less than 150% |
3.14% |
3.19% |
| At least 150% but less than 200% |
4.19% |
6.60% |
| At least 200% but less than 250% |
6.60% |
8.44% |
| At least 250% but less than 300% |
8.44% |
9.96% |
| At least 300% but not more than 400% |
9.96% |
9.96% |
2026 Premium Tax Credit Case Study
Although tax year 2026 tax returns are not due until 2027, you may need to take action now to avoid surprises on your 2026 tax return. This is because previous income related subsidies expired on December 31, 2025.
Case Study:
- For one person with an income of $62,500 (just below the $62,600 limit), the required contribution of approximately 9.96% of the income is: Annual contribution: $62,500 × 9.96% = $6,225 or monthly contribution $6,225 divided by 12 months = $518.75.
- Let's say the estimated health care plan cost is about $633.00 and the required taxpayer contribution is about $518.75 than the estimated monthly premium tax credit would be $114.25.
- Important: In comparison, if one individual made $62,601 (just above the $62,600 limit) during 2026, the entire premium tax credit will have to be paid back to the IRS. The old "safe harbor" is no longer available to limit how much a taxpayer would owe back. Previously if you were enrolled in a Marketplace plan because you estimated your income was within the FPL guidelines, but at the end of the year your actual income fell below the FPL, you were protected by a safe harbor (people who fell below the FPL were ineligible for the PTC and were directed to Medicaid). As long you were eligible at the time you signed up and you acted in good faith, the IRS did not make you pay back the tax credits you received, even though your final income was technically too low to qualify.
Premium Tax Credit Tip:
If the expected income for one person is around $62,600, consider lowering the MAGI or modified adjusted gross income:
- 1. Increase 401(k) pre-tax contributions.
- 2. Start or contribute the max. Amount to a traditional IRA.
- 3. Start or contribute the max. Amount to a Health Savings Account (HSA).
- 4. Contact an eFile.com Taxpert with your 2026 Premium Tax Credit questions.
How to Claim the Premium Tax Credit
The IRS requires you to file a tax return so you can continue qualifying for advance tax payments on your health insurance from the Marketplace. In order to do this, you will need to add the information from your Form 1095-A - Health Insurance Marketplace Statement into your eFile.com tax return account - healthcare section - when you prepare your taxes (Form 1095-A is not filed with the return.) After you complete your return, we will generate the Premium Tax Credit (PTC) Form 8962 for you based on the information you have entered from your Form 1095-A. The 8962 form will be e-filed along with your completed tax return to the IRS.
- If you did not e-file your return with the Form 8962 for the Premium Tax Credit, the IRS will reject your return asking for this information. If you have already e-filed your return on eFile.com, you can simply return to your account, add the information from your 1095-A, and re-file your return.
For further assistance with the Premium Tax Credit, contact us at eFile.com and we will help you file your return so you can fulfill the IRS requirement and claim the advance tax payments.
Frequently Asked Questions
What is the Premium Tax Credit (PTC)?
- The Premium Tax Credit (PTC) is a refundable tax credit which a taxpayer claims in advance during a tax year.
- Short-Term Tax Rates: These apply to assets or investments that are held for a relatively short period, typically one year or less. Short-term capital gains for example, are profits made on the sale of assets held for one year or less, and they are often taxed at a higher rate than long-term gains.
How is Premium Tax Credit amount calculated?
The credit is calculated based on your household income, family size, and the cost of the benchmark silver plan (SLCSP) available in your area. eFile.com provides a Premium Tax Credit Tool to help automate this calculation.
Who qualifies for the Premium Tax Credit?
You can claim payments in advance towards your monthly health insurance premium when you apply for health insurance through the Marketplace. The advance payments of the PTC are estimates, meaning they may not be exactly what you are owed which is why a tax return is needed to reconcile the amounts. If your income, family size, filing status, or other circumstance sees a change during the year, you can notify the Marketplace about this change so your advance payments are adjusted. Otherwise, the difference will be calculated when you file your return the following the year.
What is Form 1095-A and why do I need it?
You must report - not file - the details from Form 1095-A on your tax return via Form 8962. The credit amount is calculated based on your household income and the cost of available insurance plans. See the case study above. See the income levels and the associated FPL levels above. If you receive more advance PTC than you are entitled to, you may need to repay the excess amount when you file your tax return.
When to file Form 8962?
If you e-file your return and do not add Form 8962 reporting the Premium Tax Credit as someone who had health insurance through the marketplace, the IRS will reject your return. On eFile.com, you can re-efile your return by retrieving and including your 1095-A to let the eFile software generate Form 8962 for you. You can also attach a written explanation for its absence if you do not have this form or cannot get it.
What if employees get health care through their employer?
Employer: As a small business employer, compare the per employee health premium cost of a small business group with that of a healthcare marketplace plan. As a small business and employee of that business, you might experience a significant reduction in health premium fees. As a result, you might not sign up for or cancel a private or group health plan.
Employee: If you were an employee and you received health insurance through your employer, the employer(s) will provide Form 1095-C by early March of the following year. You don't have to wait until then to file your return as you might get your information in a different way from your employer. This form will report whether they offered you health insurance coverage; if they did, information will be shown about that. Information on 1095-C might be relevant if you had to purchase health insurance via the marketplace - see above. If you do wish to claim the premium tax credit, you will need Part II of Form 1095-C.
Which life changing events change the PTC?
The amount of PTC you are eligible for can change in the case of: marriage, divorce, death, change of number of dependents, etc. Make sure you keep marketplace - healthcare.gov - informed of such changes to ensure you receive the correct amount of premium tax credit.
If I file Married Separately can I claim the PTC?
Married individuals are required to file a joint return to be eligible for the Premium Tax Credit. However, there are exceptions for victims of domestic abuse and spousal abandonment.
More Information on Health Insurance and Taxes
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