What is the income threshold for full ACA premium tax credits?
Executive summary
The income threshold that determines eligibility for premium tax credits under the Affordable Care Act returns to 400 percent of the federal poverty level (FPL) for coverage and tax year 2026 unless Congress acts to extend enhanced subsidies (400% of FPL) [1] [2]. Prior temporary changes under pandemic-era legislation eliminated that cap through 2025, allowing higher‑income households to receive credits, but that expansion is set to expire, recreating the familiar “subsidy cliff” at 400% of FPL [2] [3].
1. The legal cutoff: 400% of the federal poverty level is the key line
Under the ACA’s statutory rules as originally enacted, premium tax credit eligibility was limited by an upper income boundary equivalent to 400% of the federal poverty level; the Internal Revenue Service guidance and explanatory materials continue to use the 400% FPL threshold when describing who may be subject to repayment caps or eligibility limits for years before 2026 [1]. Multiple policy trackers and consumer guides reiterate that, absent new legislation, the 400% of FPL cutoff will govern subsidy eligibility for 2026 coverage, meaning households earning even a dollar above that threshold would not qualify for advance premium tax credits [4] [3].
2. Why 2026 restores the cutoff: expiration of enhanced credits
Congress temporarily removed the 400% cap and increased subsidy generosity through the American Rescue Plan Act and subsequent reconciliation actions that extended the enhancements through the 2025 coverage year; the statutory sunset date for those enhanced premium tax credits is January 1, 2026, so the pre‑ARPA income cap (400% of FPL) resumes unless policymakers intervene [2]. Analysts and policy shops forecast steep premium increases for many Marketplace enrollees if the enhancements lapse, precisely because those above‑cap households will lose credit eligibility and low‑ and middle‑income enrollees face higher required contributions without the enhanced structure [5] [6].
3. How the 400% cutoff works in practice and who it affects
The 400% of FPL threshold is calculated against household modified adjusted gross income and varies by household size and the annual federal poverty guidelines, so the dollar value of the cutoff differs for singles, couples and families [1] [7]. Consumer calculators and industry explainers show that for 2026 that threshold translates into concrete dollar breakpoints — for example, roughly $62,600 for a single person and about $128,600 for a family of four in 2026 estimates cited by reporting — and that earning even one dollar more can eliminate advance premium tax credit eligibility under current rules [3] [5].
4. Edge cases, lower bounds, and other eligibility mechanics
Eligibility isn’t only about the 400% ceiling: the ACA also establishes minimum income floors and other conditions; traditionally the PTC was available to households with income above 100% of the FPL who lack access to affordable employer coverage, though states that expanded Medicaid can change the lower‑end landscape so some people under 100% FPL are ineligible for Marketplace credits because they qualify for Medicaid [8] [4]. Administrative rules — for example, the IRS’s affordability percentage used to determine whether employer coverage disqualifies an employee from the PTC — and recent legislative changes to special enrollment and immigrant eligibility further affect who ultimately receives subsidies in 2026 [9] [10].
5. The politics and practical fallout: the “cliff” and planning responses
Observers warn that restoring the 400% cutoff recreates a sharp subsidy cliff that can cause large premium jumps for households just above the line and possible tax repayment exposure if income projections were wrong, prompting advisors to recommend tax and income‑timing strategies to stay under the threshold or otherwise mitigate cost shocks [3] [11]. Policy advocates argue that eliminating the cap through 2025 expanded affordability and enrollment, while critics note fiscal tradeoffs; the underlying legal texts and IRS guidance make clear the boundary will be 400% of FPL for 2026 unless Congress extends or alters the enhanced credits [2] [1].
6. Reporting limits and what this analysis does not claim
Sources used here document the statutory return to the 400% of FPL cutoff and provide illustrative dollar thresholds and policy context, but they do not prescribe precise household dollar cutoffs for every state and household composition beyond the examples cited; for exact, personalized thresholds and subsidy estimates, authoritative tools that use current year FPL tables and household details are required [7] [6]. This report does not assert changes beyond the cited sources and notes that Congress could act to alter the 2026 rules before they take effect [2].