How the premium tax credit is calculated
The premium tax credit (PTC) is a refundable tax credit that lowers what you pay each month for a Marketplace plan. It is set by a formula in section 36B of the Internal Revenue Code. First, your household income is compared with the federal poverty line (FPL) for your household size. Second, that percentage is looked up in an IRS table that gives the share of your income you are expected to pay for the benchmark plan. Third, the credit is the benchmark premium minus that expected contribution, never below zero. The benchmark is the second-lowest-cost silver plan available to you in your area. You can use the credit on any metal level plan, so a cheaper bronze plan can cost you very little or even nothing.
This calculator follows those steps. It uses the poverty guidelines the law requires for each coverage year: for 2027 coverage, the 2026 guidelines ($15,960 for one person plus $5,680 for each additional person in the 48 states and D.C.); for 2026 coverage, the 2025 guidelines ($15,650 plus $5,500 per additional person). The expected-contribution percentages for 2027 come from IRS Rev. Proc. 2026-26, and for 2026 from Rev. Proc. 2025-25.
The 2027 table
| Income as % of poverty line | 2027 (starts → ends) | 2026 (starts → ends) |
|---|---|---|
| Under 133% | 2.15% | 2.10% |
| 133% to under 150% | 3.23% → 4.30% | 3.14% → 4.19% |
| 150% to under 200% | 4.30% → 6.78% | 4.19% → 6.60% |
| 200% to under 250% | 6.78% → 8.66% | 6.60% → 8.44% |
| 250% to under 300% | 8.66% → 10.22% | 8.44% → 9.96% |
| 300% to 400% | 10.22% | 9.96% |
| Over 400% | No premium tax credit | |
Within a band the percentage rises smoothly, so the calculator interpolates between the starting and ending percentage. For example, at 175% of the poverty line in 2027 you are halfway through the 150–200% band, so the expected contribution is halfway between 4.30% and 6.78%, or 5.54% of income.
The 400% cutoff is back
From 2021 through 2025, temporary enhanced subsidies removed the upper income limit and lowered the percentages. Those enhancements ended after 2025. For 2026 and 2027 the original rules apply: if your household income is above 400% of the poverty line, you get no credit at all. For a single person in 2027 that cutoff is $63,840; for a family of four it is $132,000. The calculator warns you when you are within 10% of the cutoff, because the loss is sudden: one more dollar of income can cost you the entire credit, which may be thousands of dollars. Lowering your modified adjusted gross income, for example with pre-tax 401(k), traditional IRA or HSA contributions, can move you under the line. Our subsidy cliff guide covers this in detail.
What goes in each box
- Household size is the number of people you will claim on your tax return, including yourself, a spouse and dependents.
- Income (MAGI) is your adjusted gross income plus tax-exempt interest, non-taxable Social Security benefits and foreign earned income exclusions. Estimate it for the whole year you will have coverage, not for this month.
- Benchmark premium is shown when you preview plans on HealthCare.gov or your state Marketplace. Add the benchmark premiums for each family member if the site shows them separately. Premiums depend on age, county and tobacco use, so this is the one number we cannot know for you.
- Chosen plan is optional. If you enter it, we show what you would pay after the credit. If the plan is cheaper than the credit, you pay nothing and the credit cannot exceed the plan premium.
Reconciliation: why a good estimate matters
The credit you receive monthly is an advance based on your estimate. When you file your taxes, you compare it with the credit you actually qualify for on Form 8962. If your income ended up higher than you estimated, you may have to repay the excess. The dollar caps that used to limit repayment for lower incomes were removed starting with tax year 2026, so the excess is generally repaid in full. Update your Marketplace application whenever income changes during the year, such as a raise, a second job or a change in household. Use a realistic number instead of the lowest one that qualifies you.