ACA Subsidy Income Limits 2027: The 400% Cliff Is Back

For 2027 Marketplace coverage, you qualify for an ACA premium tax credit only if your household income is between 100% and 400% of the federal poverty level: $15,960 to $63,840 for a single person and $33,000 to $132,000 for a family of four in the 48 contiguous states. Earn one dollar more than 400% and the subsidy drops to zero, which is the "subsidy cliff."

The cliff returned because the enhanced subsidies Congress passed in 2021 and extended in 2022 expired at the end of 2025 (KFF). The House passed a three-year extension in January 2026, but the Senate has not passed one, so as of October 2026 the original rules apply to both 2026 and 2027 coverage. If Congress acts later, these limits could change.

ACA Subsidy Income Limits by Household Size

Premium tax credits use the poverty guidelines published at the start of the previous year. That means 2026 coverage uses the 2025 HHS guidelines, and 2027 coverage uses the 2026 guidelines (HHS ASPE).

The 2026 guidelines start at $15,960 for one person and add $5,680 per extra person. The 2025 guidelines start at $15,650 and add $5,500. Alaska and Hawaii have higher guidelines. Income exactly at 400% still qualifies; the credit ends above it.

At the low end, most adults below 138% of the poverty line in states that expanded Medicaid are steered to Medicaid instead of a subsidized Marketplace plan.

How Much You Are Expected to Pay: The Applicable Percentage

The credit equals the cost of the second-lowest-cost silver plan in your area (the "benchmark") minus an expected contribution, which is a percentage of your income. The IRS sets those percentages each year (Rev. Proc. 2026-26 for 2027 and Rev. Proc. 2025-25 for 2026).

Within each band the percentage rises in a straight line. If the benchmark plan costs less than your expected contribution, you get no credit even below 400%. You can apply the credit to any metal level: buying a cheaper bronze plan stretches the same dollar credit further.

Worked Example: A 60-Year-Old at 390% vs 410% of the Poverty Line

Linda is 60, single and buying 2027 coverage. Premiums for older enrollees are much higher, so assume her benchmark silver plan costs $1,100 a month ($13,200 a year). Benchmark prices vary widely by county, so check yours on HealthCare.gov.

Earning $3,192 more costs Linda $6,839 in lost credit. She ends up roughly $3,600 worse off before income tax, and more after tax. Close to the cliff, a small raise, a bonus, a capital gain or an IRA withdrawal can cost more than it pays.

The same math applies to families. A family of four at $125,400 (380% FPL) is expected to pay 10.22%, or $12,816 a year. If its benchmark plan costs $24,000, the credit is $11,184. At $133,000 the credit is zero.

To see your own numbers with your county's benchmark premium and your household size, use the ACA subsidy calculator.

Who Cannot Get a Subsidy Even Under 400%

Income is not the only test. You generally cannot receive a premium tax credit if:

• You can get affordable employer coverage. For 2027, employee-only coverage counts as affordable if your share of the premium is no more than 10.22% of household income, up from 9.96% for 2026 (the IRS "required contribution percentage").
• You are eligible for Medicare, Medicaid or CHIP. Most people lose Marketplace subsidies once they qualify for premium-free Medicare Part A at 65.
• You are married and file separately, except in limited cases such as domestic abuse or spousal abandonment.
• Someone else can claim you as a dependent.

Worked Example: An Early-Retired Couple

Mark and Lisa are 62 and 61, retired and living on savings. For 2027 they plan to draw $40,000 from a brokerage account (of which $15,000 is capital gain) and $70,000 from a traditional IRA. Only the $15,000 gain counts as income, not the $25,000 return of their own money, so their MAGI is $85,000, just under the $86,560 cliff for two. If they also convert $10,000 to a Roth IRA, MAGI rises to $95,000 and their entire credit disappears. Waiting to convert until they enroll in Medicare at 65 keeps the subsidy, which for two people in their 60s, with some of the highest premiums on the Marketplace, can easily outweigh the benefit of converting early.

What Counts as Income for the Subsidy

The test uses modified adjusted gross income (MAGI) for everyone in your tax household for the coverage year, not last year's income. MAGI for the premium tax credit is your adjusted gross income plus:

• Social Security benefits that are not taxed,
• tax-exempt interest, such as municipal bond interest, and
• foreign earned income excluded from tax.

Because MAGI starts from adjusted gross income, anything that lowers AGI lowers your subsidy income too. Deductions taken after AGI, such as the standard deduction, do not help.

Strategies to Stay Under the Cliff

1. Contribute more to a traditional 401(k) or 403(b)

Pre-tax workplace contributions come out of your wages before AGI. For 2026 the limit is $24,500, plus $8,000 at age 50 or older, or $11,250 at ages 60 to 63. The 2027 limits have not been announced yet. For Linda, adding just $3,200 of pre-tax 401(k) contributions moves her from $65,436 back under $63,840 and restores the full credit. The 401(k) calculator shows the long-term effect.

2. Fund a health savings account

HSA contributions reduce AGI. The 2026 limits are $4,400 for self-only coverage and $8,750 for family coverage, plus $1,000 at 55 or older. Starting in 2026, bronze and catastrophic Marketplace plans count as HSA-eligible coverage. See the HSA calculator.

3. Choose traditional over Roth while you are on Marketplace coverage

Roth contributions do not reduce AGI and Roth conversions add to it. If you are within a few thousand dollars of the cliff, traditional contributions usually win in those years. Early retirees often save Roth conversions for the years before or after they rely on Marketplace coverage. Our Roth vs traditional guide covers the trade-off.

4. Self-employed? Use a SEP IRA or solo 401(k)

Business owners can lower AGI with retirement plan contributions and the deduction for half of self-employment tax. The solo 401(k) calculator estimates how much you can put away.

5. Time your income

Spread capital gains across years, delay a large IRA withdrawal, or draw from cash and Roth savings instead. Retirees should remember that untaxed Social Security still counts.

Report Income Changes During the Year

Your advance credit is based on the income you estimate when you enroll. Starting with the 2026 tax year, there is no longer a cap on how much excess advance credit you must repay at tax time (IRS premium tax credit Q&A). If your income ends up above 400%, you repay every dollar of advance credit received for the year. Update your Marketplace application as soon as your income changes.

Open Enrollment for 2027 Coverage

Open enrollment for 2027 plans begins November 1, 2026. On HealthCare.gov, enroll by December 15, 2026 for coverage that starts January 1, 2027. Final deadlines vary by state, and several state-run exchanges stay open into January, so confirm the date on HealthCare.gov or your state's exchange.

Frequently asked questions