Estimate your ACA Premium Tax Credit. Assumes 2025 expanded ACA rules remain in effect for 2026 (subject to legislative action).
Estimated annual subsidy (PTC)
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% of FPL
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Your contribution (Silver benchmark)
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How the marketplace decides what you pay
The Premium Tax Credit is the federal subsidy that makes Affordable Care Act marketplace plans affordable. The mechanism is cleaner than most people expect. The government decides what share of your income you should reasonably pay toward health insurance, expressed as a percentage that slides up with income. It then looks at the second-lowest-cost Silver plan in your area, the benchmark, and pays the difference between that plan's premium and your expected contribution. This calculator reconstructs that arithmetic from your household size, your modified adjusted gross income, and the benchmark premium you pull from your state exchange.
It is for anyone shopping on healthcare.gov or a state marketplace: early retirees bridging to Medicare, freelancers without employer coverage, and families between jobs. Enter your best estimate of next year's MAGI, because the subsidy is reconciled on your tax return using actual income via Form 8962.
A single filer at $60,000
Take one person with a $60,000 MAGI and a benchmark Silver premium of $6,500 a year. The 2026 poverty level used here is $15,650, so $60,000 is about 383 percent of poverty. On the expanded sliding scale, that income level caps your expected contribution near 8.08 percent of MAGI, which is roughly $4,851 for the year. The marketplace covers the rest of the benchmark premium, producing a Premium Tax Credit of about $1,649. That credit can be taken in advance to lower your monthly premium or claimed as a lump sum at tax time.
| Step | Result |
|---|---|
| Household MAGI | $60,000 |
| Federal poverty level, household of one | $15,650 |
| Income as a percent of poverty | 383% |
| Capped contribution rate | 8.08% of MAGI |
| Your expected annual contribution | $4,851 |
| Benchmark Silver premium | $6,500 |
| Estimated Premium Tax Credit | $1,649 |
The chart splits the $6,500 benchmark premium into the slice you pay and the slice the credit covers.
Why the benchmark plan matters more than the plan you buy
A point that confuses many first-time shoppers: your subsidy is pegged to the second-lowest-cost Silver plan, not to whatever plan you actually enroll in. The credit is calculated against that benchmark, then you can apply the same dollar amount to any metal tier you choose. Buy a cheaper Bronze plan and the fixed credit can cover most or even all of its premium, leaving you with a low monthly bill but a higher deductible. Buy a richer Gold plan and you pay the difference above the benchmark out of pocket. The credit dollar figure does not change with your choice, so the smart move is to decide how much medical care you expect to use, then pick the tier that minimizes your total yearly spending, premiums plus expected out-of-pocket costs, rather than chasing the lowest premium alone.
The income management trap nobody warns you about
Because the credit is reconciled against actual income, guessing too low is expensive. If you estimate $60,000, collect advance credits all year, and then earn $80,000, you must repay part of the subsidy when you file. The flip side is an opportunity: keeping MAGI just under a key poverty threshold can meaningfully raise your credit, and tools like deductible retirement contributions or an HSA can pull MAGI down. For early retirees living off taxable savings, deliberately managing the income you realize each year is one of the highest-value moves available.
Questions about the credit
Why does this assume the expanded subsidy rules?
The American Rescue Plan and Inflation Reduction Act removed the old 400 percent income cliff and capped contributions at 8.5 percent of MAGI through 2025. The calculator applies that expanded scale, but whether it continues for 2026 depends on Congressional action. If the enhanced rules lapse, the old cliff returns and households above 400 percent of poverty could lose the credit entirely.
What counts in MAGI for the ACA?
For the Premium Tax Credit, MAGI is your adjusted gross income plus any tax-exempt interest, the excluded portion of foreign earned income, and non-taxable Social Security benefits. It is not the same MAGI used for IRA phase-outs, so do not reuse a figure from another calculator without checking the components.