If you buy health insurance from healthcare.gov or a state-run ACA marketplace, a hard cutoff for whether you qualify for a premium tax credit will return in 2026. 2025 is the last year that you may still qualify for a premium tax credit if your income is above 400% of the Federal Poverty Level (FPL). See The ACA Premium Subsidy Cliff After the 2025 Trump Tax Law.
When you qualify for a tax credit, that amount is determined by a sliding scale. The government says that based on your income, you are supposed to pay this percentage of your income toward the Second Lowest-Cost Silver Plan in your area. The government will take care of the rest after you pay that amount.
If you pick a less expensive policy than the Second Lowest-Cost Silver Plan, you keep 100% of the savings, up to the point you get the policy for free. If you choose a more expensive policy than the Second Lowest-Cost Silver Plan, you pay 100% of the difference.
The Sliding Scale
That sliding scale is called the Applicable Percentages Table. The applicable percentages were lowered significantly between 2021 and 2025. It reduced the amount that many people pay for their ACA health insurance. These percentages will go up sharply in 2026.
Here are the applicable percentages for different income levels in 2025 and 2026:
| Income | 2025 | 2026 |
|---|---|---|
| < 133% FPL | 0% | 2.1% |
| 133% – 150% FPL | 0% | 3.14% – 4.19% |
| 150% – 200% FPL | 0% – 2% | 4.19% – 6.6% |
| 200% – 250% FPL | 2% – 4% | 6.6% – 8.44% |
| 250% – 300% FPL | 4% – 6% | 8.44% – 9.96% |
| 300% – 400% FPL | 6% – 8.5% | 9.96% |
| > 400% FPL | 8.5% | Unlimited |
Source: IRS Rev. Proc. 2024-35, Rev. Proc. 2025-25.
Calculator
I created a calculator that shows how much you can expect to pay toward a Second Lowest Cost Silver Plan in your area in 2025 and 2026. This doesn’t include the relative price changes between the plan you choose and the benchmark plan. You’ll pay extra if the price for your plan increases more than the benchmark plan, or less than the amount shown if the price for your plan goes up less than the benchmark plan.
Higher Marginal Tax Rate
If your income is low, the government expects you to pay a low percentage of your low income. As your income goes higher, they expect you to pay a higher percentage of your higher income. The higher percentage applies not just to the additional income but to your entire income. A higher income times a higher percentage is much more than a lower income times a lower percentage.
For example, a household of two in the lower 48 states earning $50,000 in 2026 is expected to pay 7.94% of their income toward health insurance. If they increase their income to $60,000, they are expected to pay 9.46% of their income. The increase in their expected contribution toward ACA health insurance and the corresponding decrease in their premium tax credit will be:
$60,000 * 9.46% – $50,000 * 7.94% = $1,709
This represents about 17% of the $10,000 increase in their income. For a married couple, the effect of paying 17% of the additional income toward ACA health insurance is greater than the effect of paying 12% toward their federal income tax. It makes the effective marginal tax rate on the additional $10,000 income 29%, not 12%.
Normally, it’s a good idea to consider Roth conversion or harvesting tax gains in the 12% tax bracket, but those moves become much less attractive when you receive a premium subsidy for the ACA health insurance. For a helpful tool that can calculate this effect, please see Roth Conversion and Capital Gains On ACA Health Insurance.
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