The premium tax credit is the single biggest money-saver for people who buy their own health insurance. For 2027 coverage, it’s smaller and harder to get than in recent years, which makes understanding the rules more important than ever.
Key takeaways
- For 2027 coverage, you generally need household income between 100% and 400% of the federal poverty level (FPL).
- 400% FPL is $63,840 for one person and $132,000 for a family of four (based on 2026 guidelines).
- The enhanced credits of 2021–2025 have expired, so there’s a hard “subsidy cliff” at 400%.
- You can take the credit in advance each month and reconcile it on your tax return.
2027 income limits
| Household size | 100% FPL | 400% FPL (upper limit) |
|---|---|---|
| 1 | $15,960 | $63,840 |
| 2 | $21,640 | $86,560 |
| 3 | $27,320 | $109,280 |
| 4 | $33,000 | $132,000 |
In states that expanded Medicaid, adults with incomes up to 138% FPL usually qualify for Medicaid instead of the tax credit. See Medicaid in 2027.
Who else qualifies
- You buy coverage through HealthCare.gov or your state marketplace.
- You can’t get affordable employer coverage that meets minimum value, Medicare, Medicaid or CHIP.
- If married, you generally must file a joint tax return.
- You can’t be claimed as someone else’s dependent.
How the credit is calculated
The marketplace looks at the second-lowest-cost Silver plan (the “benchmark”) in your area and an “expected contribution” — a percentage of your income that you’re expected to pay. Your credit equals the benchmark premium minus your expected contribution. The lower your income, the smaller the share you’re expected to pay.
You can apply the credit to any Bronze, Silver, Gold or Platinum plan (but not a Catastrophic plan). Because it’s a fixed dollar amount, choosing a cheaper plan than the benchmark lowers your net premium further — sometimes to $0 for a Bronze plan.
The subsidy cliff
From 2021 through 2025, there was no upper income limit. That enhancement expired, so in 2027 a household earning just over 400% FPL generally gets no credit. Older enrollees, whose premiums are higher, feel this most. If you’re near the line, pre-tax contributions to a 401(k), traditional IRA or HSA can lower your MAGI and may keep you eligible.
Advance credit vs. tax time
Most people take the credit in advance, so it’s paid straight to their insurer each month. At tax time, you file Form 8962 to compare what you received with what you qualified for based on your actual income. If your income came in higher than estimated, you may owe some back; if lower, you’ll get a refund.
Heads up: recent federal changes removed the limits on how much excess advance credit some people must repay. That makes accurate income estimates — and updating them when your income changes — more important than ever.
Frequently asked questions
What counts as income?
Modified adjusted gross income (MAGI): generally your adjusted gross income plus untaxed foreign income, tax-exempt interest and non-taxable Social Security benefits. For self-employed people, it’s net profit, not gross revenue.
My job offers insurance, but it’s expensive. Can I get the credit?
Only if the employer plan is considered unaffordable — based on what you’d pay for employee-only coverage as a share of household income — or doesn’t meet minimum value. Since 2023, family members are judged on the cost of family coverage, which helps many families qualify.
Can I take the credit at tax time instead of monthly?
Yes. You can pay full price each month and claim the whole credit when you file — useful if your income is unpredictable.
What are cost-sharing reductions?
Separate extra savings that lower deductibles and copays for people with incomes up to 250% FPL — but only on Silver plans. See metal tiers explained.
Related: Open Enrollment 2027 · 11 ways to lower your premium
Sources: HHS 2026 Poverty Guidelines; HealthCare.gov; IRS Form 8962 instructions; KFF. For education only — not tax advice. Last reviewed October 2026.
