Enhanced credits expired — one dollar over now costs everything
Data verified: Aug 2026 · Source: HHS ASPE 2025 Poverty Guidelines
An ACA subsidy calculator for 2026, the year the 400% FPL cliff returned: one dollar over it and the entire premium tax credit disappears.
Your details
Your annual premium tax credit
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Federal poverty level (—)
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Your income as % of FPL
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Cliff income (400% FPL)
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Applicable percentage
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Your required contribution
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Benchmark premium
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Premium tax credit
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⚠You are — over the cliff. Reducing MAGI by that much — through a traditional 401(k), traditional IRA or HSA contribution — restores a credit worth about — a year.
⚠Your income is below 100% of the federal poverty level. Marketplace subsidies generally do not apply here; in a Medicaid expansion state you would likely qualify for Medicaid instead.
⚠Married filing separately is barred from the premium tax credit except under the abuse or abandonment safe harbor. Filing jointly is normally required.
✓You qualify. The credit covers — of your benchmark premium, leaving you — a month to pay.
Credit vs. household income
MAGI
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How this is calculated
The premium tax credit caps what you pay for a benchmark silver plan at a set percentage of your income. The credit is the gap between that capped contribution and the actual benchmark premium. The percentage rises with income, so the credit shrinks as you earn more.
What makes 2026 different is the cliff. The enhanced credits introduced in 2021 removed the upper income limit entirely; they expired on 31 December 2025. From 1 January 2026 the original rule is back: above 400% of the federal poverty level the credit is not reduced, it is eliminated. A single dollar of extra income can cost a family more than ten thousand dollars.
Formula
pctFPL = MAGI / FPL × 100
if pctFPL > 400 → credit = 0 (the cliff)
applic% = linear interpolation within the applicable percentage band
required = MAGI × applic%
credit = max(0, benchmark premium − required)
Interpolation inside each band is mandatory — the statute specifies a sliding scale, not a flat rate per bracket. The 2025 poverty guidelines govern 2026 coverage.
Worked example
A family of four in the 48 contiguous states with MAGI of $130,000 and a benchmark premium of $18,000 a year.
Federal poverty level, household of 4$32,150
Income as a percentage of FPL404.4%
Cliff income (400% FPL)$128,600
Amount over the cliff$1,400
Premium tax credit$0
The $1,400 that is worth $5,191
In the example above, moving $1,400 into a traditional 401(k) brings MAGI to exactly $128,600 — back under the cliff. At that income the required contribution is 9.96% of $128,600, or $12,809, so the credit becomes $18,000 − $12,809 = $5,191 a year. A $1,400 contribution buys a $5,191 credit plus the income tax saved on the contribution itself. Very few financial moves return that.
Alaska and Hawaii
Both states use higher poverty guidelines, so their cliffs sit further out. The per-person add-on figures used here are approximations; pull the exact numbers from the HHS ASPE detailed guidelines before relying on them for a borderline case.
Frequently asked questions
What exactly changed in 2026?
The enhanced premium tax credits introduced by the American Rescue Plan and extended by the Inflation Reduction Act expired at the end of 2025. Those had removed the 400% federal poverty level income limit entirely and capped premiums at 8.5% of income. From 2026 the original structure returns, including the hard cliff at 400% with nothing above it.
Which year of poverty guidelines applies?
The guidelines published in the year before the coverage year. So 2026 coverage uses the 2025 HHS poverty guidelines, which is why the figures on this page are dated 2025 rather than 2026. Guidelines are normally released in January or February, and Alaska and Hawaii have their own higher tables.
What counts as MAGI for the ACA?
Under section 36B it is your adjusted gross income plus tax-exempt interest, plus the untaxed portion of Social Security benefits, plus any excluded foreign earned income. It is not the same MAGI definition used for IRA deductions or for Medicare IRMAA, and municipal bond interest that is tax-free elsewhere is added straight back here.
Can I fix it after the year ends?
Partly. A traditional IRA or HSA contribution can usually be made up to the filing deadline and still count for the prior year, which can pull MAGI back under the cliff retroactively — our ACA MAGI reduction calculator solves for the exact amount. A 401(k) contribution cannot, because it must run through payroll during the year.
What if my income is below 100% of FPL?
Marketplace subsidies generally start at 100% of the federal poverty level. Below that, in a Medicaid expansion state you would normally qualify for Medicaid instead, which is usually better cover at lower cost. In a non-expansion state this is the coverage gap, where neither Medicaid nor subsidised marketplace coverage is available.
Does married filing separately work?
Almost never. Married filing separately filers are barred from the premium tax credit outright, except under a narrow safe harbor for victims of domestic abuse or spousal abandonment. If you are married and want a credit, a joint return is effectively required, which can interact awkwardly with other planning.
HHS ASPE 2025 Poverty Guidelines · IRS Rev. Proc. 2025-25
Disclaimer
Estimates for general information only, not tax or insurance advice. Benchmark premiums vary by county, age and tobacco use — use the figure your own marketplace quotes. Consult a qualified professional or a certified marketplace navigator.