How the Premium Tax Credit Works
The credit is not a percentage off a price. It works the other way round: the law fixes what you pay, and the credit covers the rest. A table indexed by your income as a percent of the poverty line gives an applicable percentage, that percentage of your income is your required contribution, and the credit is whatever the benchmark plan costs above it.
Benchmark plan premium − (your income × applicable percentage) = your premium tax credit
The benchmark is the second-lowest-cost Silver plan sold in your area, whether or not you buy it. Pick a cheaper plan and you keep the difference; pick a dearer one and you pay it. That is why the calculator asks for the benchmark premium rather than the price of the plan you want, and why it cannot guess: the figure depends on your county and the ages of everyone covered.
What Changed for 2026 (The Subsidy Cliff Is Back)
From 2021 through 2025, temporary enhanced subsidies removed the 400% ceiling: above that line a household paid no more than 8.5% of income toward the benchmark plan, rather than losing the credit outright. Those enhancements were enacted with an end date and expired on 31 December 2025.
For the 2026 plan year the pre-2021 rule is therefore back: the credit is available between 100% and 400% of the poverty line, and a household one dollar over 400% receives nothing. That step at the edge is what people mean by the subsidy cliff.
A bill to restore the enhanced credits passed the House in January 2026. As of this writing it has not passed the Senate, and the outcome is not settled. This page states the rule as it stands rather than as it may become — but if your income is near or above the line, the status is worth checking before you choose a plan, because it changes the answer entirely.
2026 Income Limits by Household Size
Marketplace credits are measured against the previous year's poverty guidelines, so 2026 coverage uses the 2025 figures — not the same numbers Medicaid uses this year. The range runs from 100% to 400% of these:
- 1 person: $15,650 poverty level — credit range $15,650 to $62,600.
- 2 people: $21,150 poverty level — credit range $21,150 to $84,600.
- 3 people: $26,650 poverty level — credit range $26,650 to $106,600.
- 4 people: $32,150 poverty level — credit range $32,150 to $128,600.
Alaska and Hawaii use higher poverty guidelines, so both ends of their range sit above the figures here.
Important Disclaimer
This is an educational estimate only, based on current 2026 federal rules (IRS Rev. Proc. 2025-25) and is not tax advice. Actual credits are calculated on IRS Form 8962 using your exact benchmark plan premium and final household income. Premium tax credit rules are a current legislative topic and may change — verify the latest status at healthcare.gov before making coverage decisions. healthcare.gov