ACA Premium Tax Credit Applicable Percentages and Limits

For the 2026 tax year, the ACA Premium Tax Credit applicable percentages run from 2.10% to 9.96% of household income on a sliding scale tied to where your income sits between 100% and 400% of the federal poverty level.¹ That percentage is the share of income you are expected to pay toward a benchmark Marketplace plan; the credit picks up whatever the benchmark costs above it. Every other number in the calculation flows from getting this one right.

The 2026 Applicable Percentage Table

The IRS updates the table each year through a revenue procedure. The 2026 version reflects the permanent ACA formula, now back in force after the temporary enhanced credits expired at the end of 2025. Each tier has an initial percentage and a final percentage, and your actual figure sits somewhere between them based on exactly where your income falls in the tier.¹

Below 133% of FPL: 2.10% (initial and final)
133% to under 150% of FPL: 3.14% initial, 4.19% final
150% to under 200% of FPL: 4.19% initial, 6.60% final
200% to under 250% of FPL: 6.60% initial, 8.44% final
250% to under 300% of FPL: 8.44% initial, 9.96% final
300% to 400% of FPL: 9.96% (initial and final)

These figures are meaningfully higher than the 0% to 8.5% range that applied from 2021 through 2025 under the American Rescue Plan and Inflation Reduction Act enhancements. Lower-income households feel the difference most sharply: a family that paid 0% of income toward a benchmark plan now owes at least 2.10%.¹

How the Sliding Scale Works Inside a Tier

The table is not a set of flat brackets. Within each tier, the percentage rises in a straight line from the initial to the final value. Sit at the bottom of a tier and you pay close to the initial percentage; sit near the top and you pay close to the final one.

A household at 175% of FPL falls in the 150%-to-200% tier, which runs from 4.19% to 6.60%. Because 175% is halfway through the tier, the applicable percentage lands near the midpoint, roughly 5.40%. Exact decimal values live in Table 2 of the Instructions for Form 8962, which maps a specific poverty-level ratio to a precise figure.²

Linear interpolation prevents cliff effects. Instead of jumping from 4.19% to 6.60% when you cross an income threshold, the percentage creeps up gradually, so a small raise does not spike your insurance costs.

What Income Feeds the Percentage

The credit uses Modified Adjusted Gross Income, which is your Adjusted Gross Income plus three additions: foreign earned income you excluded from taxes, tax-exempt interest, and the non-taxable portion of Social Security benefits.³ That last piece catches people off guard, because Social Security income that never appears on your regular tax return still counts here.

Household income is not just yours. It includes the MAGI of every person in your tax household who was required to file a return for the year.³ A 20-year-old dependent who earned enough to trigger a filing requirement adds to your household total even though they file their own return.

You then compare that combined income to the federal poverty guidelines for your household size. For 2026, the poverty level for a single person in the 48 contiguous states is $15,960, and for a family of four it is $33,000.⁴ Alaska and Hawaii have higher guidelines. Household income divided by the applicable poverty figure gives you the ratio that determines your tier in the table.

Who the Percentages Apply To

For 2026, the credit is available only when household income falls between 100% and 400% of FPL.³ For a single person, that range works out to roughly $15,960 to $63,840. For a family of four, about $33,000 to $132,000. A dollar over 400% and the credit drops to zero with no phase-out.

The 400% cap is back because the enhanced credits sunset. From 2021 through 2025, there was no upper income limit, and households above 400% of FPL could still receive a credit as long as their benchmark plan premium exceeded 8.5% of income. That provision expired on January 1, 2026, and no subsequent legislation has reinstated it.³

Beyond income, you must be enrolled in a Marketplace plan for at least one month during the year, and you cannot be eligible for affordable employer coverage, Medicare, Medicaid, or TRICARE.⁵

The top applicable percentage does double duty as the employer-coverage affordability threshold. For plan years starting in 2026, employer coverage counts as affordable only if the employee’s required contribution for self-only coverage stays at or below 9.96% of household income. If it costs more, you can opt for a Marketplace plan and claim the credit instead. The same 9.96% test applies separately to family members under the 2023 family glitch fix: if covering the family through the employer plan would cost more than 9.96% of household income, those family members can qualify for Marketplace subsidies on their own.¹

Turning the Percentage Into a Dollar Credit

Three numbers drive the calculation: household income, the applicable percentage, and the annual cost of the second-lowest-cost silver plan (SLCSP) available in your area. The SLCSP is the benchmark for every credit calculation, whichever plan you actually enrolled in.⁶

The math runs in two steps. First, multiply household income by the applicable percentage; that dollar amount is your expected contribution, the share the statute considers yours to pay. Second, subtract that expected contribution from the annual SLCSP cost; the remainder is your Premium Tax Credit. The credit is refundable, so it can reduce your tax bill below zero and generate a refund.⁷

Take a single person earning $25,000 in 2026, roughly 157% of FPL. That sits in the 150%-to-200% tier and yields an applicable percentage around 4.53%. Expected contribution: about $1,133 per year. If the local SLCSP costs $6,000 annually, the credit works out to roughly $4,867. You can apply the credit monthly to reduce premiums in advance or claim it as a lump sum when you file.⁷

One detail worth pinning down: if you enroll in a plan cheaper than the SLCSP, the credit does not shrink to match; it is always calculated against the benchmark. Choose a bronze plan that costs less than your credit and the leftover reduces your premium further, possibly to zero. Choose a gold or platinum plan and you pay the full difference above the credit yourself.

Why the Percentage Matters at Filing Time

The applicable percentage determines not only your credit but also what you owe back if your advance payments turned out to be too high. Marketplace advance payments are estimates based on projected income; the actual applicable percentage is fixed by your year-end income on Form 8962. If your income landed higher than you estimated, your percentage rises, your allowed credit shrinks, and the difference is repaid on your return.

For 2026, repayment caps have been eliminated entirely. Through 2025, the IRS limited repayment based on income; a single filer under 200% of FPL, for example, owed back no more than $375 even when the overpayment was far larger. Starting with the 2026 tax year, you repay the full excess with no cap, whatever your income.⁸ Accurate income estimates on the Marketplace application matter far more than they used to, because a small underestimate now flows straight into your April tax bill.

If income came in lower than expected, the applicable percentage drops, your allowed credit grows, and the extra amount reduces your tax or increases your refund when you file Form 8962.²

1
Internal Revenue Service. Revenue Procedure 2025-25
2
Internal Revenue Service. Instructions for Form 8962
3
Office of the Law Revision Counsel. 26 USC 36B – Refundable Credit for Coverage Under a Qualified Health Plan
4
Federal Register. Annual Update of the HHS Poverty Guidelines
5
Internal Revenue Service. Eligibility for the Premium Tax Credit
6
HealthCare.gov. Second Lowest Cost Silver Plan (SLCSP)
7
HealthCare.gov. Premium Tax Credit
8
Centers for Medicare and Medicaid Services. Limits on Excess Advance Premium Tax Credit Repayment