Premium Tax Credits and Extra Savings: How the 2026 and 2027 Rules Work

Marketplace coverage comes with two kinds of financial help. The premium tax credit lowers your monthly premium. Cost-sharing reductions, which HealthCare.gov calls "extra savings," lower what you pay when you actually use care. Many households qualify for one, some for both.

The rules changed at the start of 2026. A temporary expansion of the credit ended after 2025, and so did the cap on how much you might have to repay at tax time. If you last looked at Marketplace savings a few years ago, the numbers you remember may no longer apply.

This guide explains the 2026 and 2027 rules as published by the IRS and HealthCare.gov. It is general information, not tax, insurance or legal advice. For your own numbers, use the Marketplace application, a free Marketplace assister or a licensed tax professional.

What the premium tax credit is

The IRS describes the premium tax credit as a refundable credit that helps eligible people with low or moderate income afford coverage bought through the Marketplace, on a sliding scale where lower incomes get larger credits. HealthCare.gov adds that the Marketplace is the only way to get it.

You choose how to receive it. When you enroll, the Marketplace estimates your credit, and you can have all, some or none of it paid in advance to your insurer to lower your monthly bill. Or you can claim the whole credit when you file your federal return. Either way, the IRS says you file Form 8962 with your return to work out the final amount.

Who qualifies in 2026 and 2027

The IRS's questions and answers (updated February 19, 2026) say you generally may be eligible if your household income for the year is at least 100 percent but no more than 400 percent of the federal poverty line for your family size. For tax years 2021 through 2025, Congress had temporarily removed the 400 percent ceiling; that expansion has ended. HealthCare.gov's 2026 glossary entry says the same: income between 100% and 400% of the poverty level qualifies in all states.

Income isn't the only test. The IRS lists several other conditions, including:

• You don't file as married filing separately, apart from narrow exceptions for certain victims of domestic abuse or spousal abandonment.
• Nobody else can claim you as a dependent.
• You're enrolled in a Marketplace plan other than a Catastrophic plan.
• You can't get affordable job-based coverage that provides minimum value, and you aren't eligible for Medicaid, Medicare, CHIP or TRICARE.
• Your share of the premium is paid.

Job-based coverage has its own yardstick. The IRS says that for 2026 plan years, an employee's offer is generally affordable if the employee's share of the premium for self-only coverage doesn't exceed 9.96 percent of household income, a figure set in Revenue Procedure 2025-25. For 2027 plan years, Revenue Procedure 2026-26 raises that percentage to 10.22 percent.

Immigration status matters too. HealthCare.gov warns that, starting January 1, 2027, only lawful permanent residents, Cuban or Haitian entrants and Compact of Free Association migrants qualify for Marketplace savings; other lawfully present immigrants can buy coverage without savings.

Which poverty guidelines apply

Your income is measured against the federal poverty guidelines, but not the current year's. The IRS explains that eligibility uses the guidelines most recently published on the first day of open enrollment; for example, credits for 2025 are based on the 2024 guidelines. HealthCare.gov lists $15,650 for one person under the 2025 guidelines, which apply to 2026 coverage, and $15,960 for one person under the 2026 guidelines, which apply to 2027 coverage. For a single adult, then, the 400 percent ceiling works out to $62,600 for 2026 coverage and $63,840 for 2027 coverage, using those HealthCare.gov figures. HHS publishes separate, higher guidelines for Alaska and Hawaii.

Income here means modified adjusted gross income for your whole tax household, as the IRS defines it: adjusted gross income plus untaxed foreign income, nontaxable Social Security benefits and tax-exempt interest.

How the credit amount is calculated

The IRS explains the core formula: your credit generally equals the premium for the second-lowest-cost Silver plan available to your household (often called the benchmark plan), minus a set percentage of your household income. The credit can't be more than the premium for the plan you actually pick.

That percentage rises with income. IRS Revenue Procedure 2025-25 sets the 2026 table:

• Below 133% of the poverty line: 2.10% of income.
• 133% to under 150%: 3.14% to 4.19%.
• 150% to under 200%: 4.19% to 6.60%.
• 200% to under 250%: 6.60% to 8.44%.
• 250% to under 300%: 8.44% to 9.96%.
• 300% to 400%: 9.96%.

Because the credit is pegged to a benchmark Silver plan, you can use it on a plan in any metal category. Pick a plan cheaper than the benchmark and you pay less; pick a pricier one and you pay the difference. The IRS also notes that tobacco surcharges aren't counted in the benchmark, so a tobacco user pays any surcharge on top.

For 2027, IRS Revenue Procedure 2026-26 raises the table, from 2.15% of income below 133% of the poverty line to 10.22% at 300% to 400%. The IRS updates the table each year, and your Marketplace eligibility results apply it to your own income.

Reconciling at tax time: no cap from 2026

Advance payments are based on an estimate. At tax time, the IRS compares what was paid in advance with the credit you actually qualify for. If you got too little, the difference adds to your refund. If you got too much, you owe it back.

This is the biggest change for 2026. The IRS says that for tax years after 2025, there is no repayment cap: you must repay the full amount by which advance payments exceeded your credit. A raise, a bonus, a large retirement withdrawal or a new household member can all shift the math. HealthCare.gov's 2026 guidance says to update your application as soon as income or household changes, and since you can take less than the full credit in advance, a smaller advance payment is one way to reduce the risk of owing. If you end up owing more than you can pay, the IRS says it routinely works with taxpayers on payment arrangements.

Cost-sharing reductions: extra savings with Silver plans

Cost-sharing reductions lower deductibles, copayments, coinsurance and your out-of-pocket maximum. HealthCare.gov's 2026 guidance is firm on one point: you get them only if you enroll in a Silver plan. You can still use the premium tax credit on a Bronze or Gold plan, but you'd give up the extra savings.

How much they help depends on income. HealthCare.gov's plan-category page (as of October 2026) estimates that a standard Silver plan pays about 70% of covered costs, while a Silver plan with extra savings pays roughly 73% to 94%, depending on how much you qualify for. HealthCare.gov says you can tell you qualify if your Eligibility Determination Notice says you can choose a plan with lower copayments, coinsurance and deductibles followed by (04), (05) or (06). Catastrophic plans don't get cost-sharing reductions or the tax credit. Members of federally recognized tribes and Alaska Native Claims Settlement Act shareholders may qualify for additional cost-sharing reductions, according to HealthCare.gov.

Key takeaways

• For 2026, the IRS says the premium tax credit is generally limited to household incomes from 100% to 400% of the poverty line; the temporary 2021 to 2025 expansion has ended.
• The credit equals the benchmark Silver premium minus a percentage of income set each year (2.10% to 9.96% for 2026, per Revenue Procedure 2025-25, and 2.15% to 10.22% for 2027, per Revenue Procedure 2026-26) and works with any metal level.
• Starting with tax year 2026, there's no cap on repaying excess advance credits, so report income changes quickly.
• Cost-sharing reductions apply only to Silver plans and can cut deductibles and out-of-pocket maximums substantially.
• Confirm your own eligibility and credit amount through your Marketplace results, IRS.gov or a tax professional.

Sources

• Internal Revenue Service, Questions and answers on the Premium Tax Credit (updated February 19, 2026)
• Internal Revenue Service, Revenue Procedure 2025-25
• Internal Revenue Service, Revenue Procedure 2026-26
• HealthCare.gov, Premium tax credit (glossary)
• HealthCare.gov, Federal poverty level (glossary)
• HHS Office of the Assistant Secretary for Planning and Evaluation, Poverty Guidelines
• HealthCare.gov, Cost-sharing reductions
• HealthCare.gov, Health plan categories: Bronze, Silver, Gold and Platinum
• HealthCare.gov, Coverage for lawfully present immigrants