Imagine earning just one extra dollar and losing more than $11,500 in health insurance assistance. For some people who purchase health insurance through HealthCare.gov, that’s a real possibility in 2026.
Changes to the Premium Tax Credit, which helps eligible individuals and families pay for Marketplace health insurance, have brought back an income limit that could leave some households paying thousands more for coverage. With the end of 2026 approaching, an unexpected increase in income could also mean a larger tax bill when you file your return.
What's changing with the Premium Tax Credit?
From 2021 through 2025, temporary federal rules expanded the Premium Tax Credit, allowing more households to qualify for assistance and reducing the amount many people paid toward their monthly health insurance premiums. Those enhanced benefits expired at the end of 2025, bringing two significant changes for 2026 and beyond.
1.
Households that still qualify for the credit may receive less financial assistance, even if their income hasn’t changed. That means paying a larger share of their monthly insurance premiums.
2.
The income limit for eligibility has returned. Households earning more than 400% of the federal poverty level generally no longer qualify for the Premium Tax Credit, regardless of how much their health insurance costs.
This sharp cutoff is often called the subsidy cliff. For households near the threshold, even a small increase in income can mean losing thousands of dollars in assistance.
2026 & 2027 Premium Tax Credit Income Limits
The income limit depends on your household size and changes annually. The following table shows the maximum household income allowed to qualify for the Premium Tax Credit in 2026 and 2027.*
Household Size | 2026 Income Limit | 2027 Income Limit |
|---|---|---|
1 | $62,600 | $63,840 |
2 | $84,600 | $86,560 |
3 | $106,600 | $109,280 |
4 | $128,600 | $132,00 |
5 | $150,600 | $154,720 |
6 | $172,600 | $177,440 |
*These limits apply to Wisconsin, the other contiguous states, and Washington, D.C. Alaska and Hawaii have different thresholds. Eligibility is based on household income calculated for Premium Tax Credit purposes, which may differ from your salary or gross earnings. Other eligibility requirements also apply.
Beware of back credits at tax time.
There’s another important change for 2026, even if your income remains below the subsidy cliff. Most people who qualify for the Premium Tax Credit receive their assistance in advance, reducing their monthly insurance premiums based on their estimated annual income. When they file their tax return, their actual income determines how much assistance they were entitled to receive.
Beginning in 2026, any excess advance credits must be repaid in full. Previous rules limited how much certain households had to repay, but those protections have been eliminated. If your income ends up higher than expected, you could owe back a portion of your credit. And if that additional income pushes you above the eligibility threshold, you could be responsible for repaying the entire amount you received.
How One Extra Dollar Could Cost You More Than $11,500
Consider a married couple in their early 60s who purchases health insurance through the Marketplace. Their household income for 2026 is $84,600, exactly at the eligibility limit for a two-person household. Their benchmark health insurance plan costs $20,000 annually.
At that income level, the couple qualifies for approximately $11,574 in premium tax credits, reducing their annual share of the premiums to about $8,426.
But suppose they receive an unexpected bonus or realize an additional investment gain that increases their annual income by just $1. Their income is now $84,601, putting them above the eligibility limit and eliminating their entire credit. If the couple had already received their $11,574 credit through reduced monthly premiums, they would have to repay that amount when filing their 2026 tax return.
While this example illustrates an especially dramatic outcome, the risk is relevant for anyone whose income changes throughout the year, particularly self-employed individuals, early retirees, and households receiving bonuses or investment income.
What you can do now to protect your credits
With year-end approaching and 2027 Marketplace open enrollment underway, now is a good time to review how your income could affect your health insurance assistance.
Review your projected 2026 household income.
Compare your expected annual income with the eligibility limits above, especially if you’ve received a raise, bonus, investment gains, or retirement distributions during the year.
Talk to your tax advisor before making significant financial decisions.
If you’re approaching the income limit, there may be opportunities to manage the timing of income or make eligible contributions that could help preserve your credit. These strategies depend on your individual circumstances, and some decisions must be made before December 31.
Update your Marketplace information.
If your income or household circumstances have changed, report those changes through the Marketplace. Keeping your information current can help reduce the risk of receiving excess credits that you’ll have to repay at tax time.
Plan ahead for your 2027 coverage.
As you compare insurance options, review your expected household income for next year and how much assistance you may qualify to receive. If your income fluctuates, consider discussing your credit estimates with your advisor before deciding how much assistance to take in advance.
A little planning before year-end could make a significant difference in your health insurance costs and tax liability. If you’re concerned about approaching the eligibility limit or unsure how changes in your income may affect your credit, reach out to your Wegner tax advisor to discuss your options.
