The calculator
At $70,000 of modified AGI you pay 9.96% of income, $6,972 a year, toward the benchmark plan, and the credit covers the other $24,828. You can add $14,600 more income in 2026; one dollar past $84,600 loses $23,374 of credit.
Credit by income
| Share of poverty line | Modified AGI | You pay | Credit a year |
|---|---|---|---|
| 150% | $31,725 | 4.19% of income | $30,471 |
| 200% | $42,300 | 6.60% of income | $29,008 |
| 250% | $52,875 | 8.44% of income | $27,337 |
| 300% | $63,450 | 9.96% of income | $25,480 |
| 350% | $74,025 | 9.96% of income | $24,427 |
| 400% | $84,600 | 9.96% of income | $23,374 |
| Just over 400% | $84,601 | Full premium | $0 |
The 400% cliff is back
From 2021 through 2025, enhanced credits capped the benchmark premium at 8.5% of income at any income. They expired at the end of 2025 and have not been extended, so for 2026 and 2027 coverage the credit stops completely above 400% of the federal poverty line. For 2026 coverage that is $62,600 for one person and $84,600 for two in the 48 contiguous states. At the cliff, a household pays 9.96% of income in 2026 and 10.22% in 2027; one dollar over, it pays the full premium.
The cliff hurts most for people in their late 50s and early 60s, whose premiums are up to three times those of a 21-year-old. KFF puts the average 2026 benchmark premium for a 60-year-old at $15,914 a year, so a couple of that age can lose more than $20,000 of credit by earning one dollar too much.
What counts as income
The credit is based on modified AGI for the whole tax household: adjusted gross income plus tax-exempt interest, the untaxed part of Social Security and excluded foreign income. It includes IRA and 401(k) withdrawals, Roth conversions, capital gains and dividends, but not withdrawals of Roth contributions, the cost basis of investments you sell, or cash savings.
Managing income in early retirement
- Spend from cash, taxable accounts (only the gain counts) and Roth contributions to keep income low.
- Size Roth conversions and capital gain harvesting to the room below the cliff, not to the top of a tax bracket.
- Contributions to a traditional IRA, a 401(k) or an HSA lower modified AGI if you still have earned income.
- Do not aim right at the line: an unexpected dividend or capital gain distribution in December can push you over.
Estimating wrong now costs more
The credit is usually paid in advance, based on the income you estimate when you enroll, and settled on your tax return. Until 2025, repayment of excess advance credit was capped for most incomes. From tax year 2026 the caps are gone: if your income comes in higher, you repay all of the excess. Update your marketplace application when your income changes.
Assumptions and sources
The credit is the benchmark premium minus your required contribution, assuming you buy a plan that costs at least the benchmark. Your actual benchmark depends on your county and the ages of everyone covered; HealthCare.gov or your state’s marketplace shows it. The default is two 60-year-olds at the 2026 national average. For 2027 the Medicaid line uses the 2026 poverty guideline until the 2027 one is published. Not tax advice.
Figures checked on against IRS Rev. Proc. 2025-25, 2026 premium tax credit percentages (PDF), IRS Rev. Proc. 2026-26, 2027 premium tax credit percentages (PDF), HHS poverty guidelines, IRS, repayment caps eliminated for excess advance premium tax credit and KFF, how the loss of enhanced premium tax credits affects older adults.
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