What are the current income thresholds for ACA premium tax credits in 2025?
Executive summary
In 2025 the Affordable Care Act’s Premium Tax Credit (PTC) applies to people with household income at or above 100 percent of the Federal Poverty Level (FPL), and—because Congress temporarily removed the statutory 400% FPL cap for tax years 2021 through 2025—there is no maximum income limit for eligibility through the 2025 coverage year [1] [2]. The credit’s size is determined on a sliding scale tied to income as a percent of the FPL (with households at or below about 150% FPL paying zero toward a benchmark plan and those at or above 400% subject to a maximum required contribution around 8.5% of income under the enhanced rules), and eligibility for 2025 coverage uses the 2024 FPL guidelines [3] [1] [4].
1. What “income thresholds” mean for 2025: statutory floor, not a ceiling
For 2025 the basic statutory floor remains that a taxpayer’s household income must be at least 100 percent of the Federal Poverty Level to qualify for the PTC, meaning people with incomes below the FPL generally do not qualify for the credit (though coverage rules and Medicaid expansion status can affect individuals in that range) and eligibility calculations use Modified Adjusted Gross Income (MAGI) aggregated across the tax-filing household [1] [5] [4].
2. The temporary removal of the 400% cap — why it matters and what it does
Congress’s post‑COVID enhancements temporarily eliminated the ACA’s longstanding upper limit that formerly restricted PTC eligibility to households with incomes no more than 400% of the FPL; that elimination applied for tax years 2021 through 2025, so for the 2025 coverage year there is effectively no statutory maximum income threshold for receiving enhanced PTCs [1] [2]. That policy is the reason middle‑income households with incomes above 400% of the FPL were newly eligible for subsidies during this period, and it is what produces the so‑called “suspension” of the subsidy cliff through 2025 [6] [2].
3. The sliding scale and concrete contribution benchmarks in 2025
The PTC is calculated by capping the enrollee’s required contribution to the benchmark (second‑lowest‑cost silver) plan at a specified percentage of income that varies by income bands; under the enhanced rules for 2025, households at the lower end (roughly 100–150% of FPL) can have a required premium contribution of zero, while households at or above 400% of FPL face a required contribution capped near 8.5 percent of income for the calculation of subsidies [3] [7]. The marketplace uses the 2024 poverty guidelines to set those percentages and subsidy amounts for 2025 coverage, and the applicable percentages themselves are indexed and can change each year [4] [7].
4. Other eligibility gates that interact with income thresholds
Income is necessary but not sufficient: eligibility also requires not having access to other qualifying coverage, because an affordable, minimum‑value employer plan or eligibility for Medicaid/CHIP or Medicare can disqualify someone regardless of FPL percentage (the affordability test and other exclusions apply) and in 2025 the affordability test for employer coverage was applied with a benchmark around 9.02% of household income for determining employer affordability [8] [3]. Additionally, state Medicaid expansion choices affect people near the 100% FPL floor—tax‑based PTC eligibility and Medicaid eligibility interact, so some low‑income residents in non‑expansion states may fall into gaps [5].
5. What changes after 2025 and the political context
The enhanced rules that removed the 400% cap are scheduled to expire at the end of 2025, meaning that absent new legislation the PTC would revert to pre‑enhancement rules that generally limit eligibility to families with incomes below 400% of FPL and make the credit less generous; commentators and analysts warn that this would recreate a “subsidy cliff” and raise premiums sharply for many enrollees above 400% FPL [5] [6]. Policymakers and analysts also point to enforcement, verification and improper‑claim estimates (including CBO and agency analyses that found concentrations of reported incomes just above thresholds), making the post‑2025 landscape both politically contested and administratively fraught [9] [10].