Income limits for the Premium Tax Credit change each year and depend on your household size
The Premium Tax Credit is a federal subsidy that lowers your monthly health insurance payments. The amount you receive depends on your income relative to the federal poverty level for your household size. The IRS sets new income thresholds every January, so the limits you see this year will not be the same next year.
You can receive a Premium Tax Credit if your income falls between 100% and 400% of the federal poverty level. Below 100%, you may be directed toward Medicaid instead. Above 400%, you do not may have access to for the credit, though you can still buy insurance on the marketplace at full price.
The actual dollar amounts vary by state because some states have expanded Medicaid and others have not. Your household size — including dependents you claim on your taxes — also changes your limit. A single person's 400% threshold is different from a family of four's threshold.
Key Takeaways
- Income limits are set as a percentage of the federal poverty level: you must earn between 100% and 400% of that level to receive the credit.
- The federal poverty level changes each year, so your income limit for 2024 is different from 2025, and you should check the current year's figures.
- Your household size determines which poverty level applies to you — a family of three has a higher dollar threshold than a single person.
- If your income falls below 100% of the poverty level, you may be directed to Medicaid instead of the Premium Tax Credit, depending on your state.
- You report your expected income for the year when you enroll, and the IRS reconciles the actual amount you earned when you file taxes.
How the 100% to 400% range works
The Premium Tax Credit uses a percentage-based system rather than a fixed dollar amount. This means the income limit scales with the federal poverty level, which the Department of Health and Human Services updates annually.
At 100% of the poverty level, you are at the threshold where you may may have access to for Medicaid in your state. At 400%, you reach the upper limit for the credit. Between those two points, the credit amount you receive decreases as your income rises. Someone earning 150% of the poverty level receives more credit than someone earning 350%.
If your income is projected to be above 400% of the poverty level for the year, you will not receive a Premium Tax Credit through the marketplace. You can still purchase insurance, but you will pay the full premium yourself.
Federal poverty level amounts by household size (2024 example)
The federal poverty level is published by the Department of Health and Human Services each year. The following table shows approximate 2024 figures for the 48 contiguous states and Washington, D.C. Alaska and Hawaii have higher thresholds. These numbers change annually, so you should verify the current year's figures before calculating your own limit.
| Household Size | 100% of Poverty Level | 400% of Poverty Level |
|---|---|---|
| 1 person | $14,580 | $58,320 |
| 2 people | $19,720 | $78,880 |
| 3 people | $24,860 | $99,440 |
| 4 people | $30,000 | $120,000 |
| 5 people | $35,140 | $140,560 |
To find the current year's poverty levels, visit aspe.hhs.gov and search for "poverty guidelines." The site publishes the official figures used by the IRS and marketplace enrollment systems. Your state's marketplace website also displays the income limits during open enrollment.
What counts as income for the Premium Tax Credit
The IRS counts Modified Adjusted Gross Income (MAGI) when determining your Premium Tax Credit amount. MAGI is not the same as your total earnings. It includes wages, self-employment income, interest, dividends, and certain other sources, but excludes some types of income like Social Security benefits and certain foreign income.
When you enroll in the marketplace, you report your expected income for that year. If you are self-employed or your income fluctuates, you estimate based on what you think you will earn. The marketplace uses this estimate to calculate your monthly credit amount.
At tax time, you report your actual income on your tax return. If you earned less than you estimated, you may receive a refund of the difference. If you earned more, you may owe back some of the credit you received. This is called reconciliation, and it happens when you file your federal income tax return.
How income changes affect your credit during the year
You can update your income estimate at any time during the year if your circumstances change — for example, if you lose a job, get a raise, or have a child. The marketplace will recalculate your credit based on the new estimate and adjust your monthly payment.
If your income rises above 400% of the poverty level during the year, you will lose the credit for the remaining months. If it falls below 100%, you may be directed to Medicaid instead, depending on your state's Medicaid rules.
It is important to report changes promptly. If you do not update your income and you actually earn more than you reported, you will owe back the excess credit when you file taxes. The IRS can apply this amount to future tax refunds or require you to pay it directly.
State variations in Medicaid and income limits
Some states have expanded Medicaid to cover people earning up to 138% of the federal poverty level. Other states have not expanded Medicaid, so the lower income limit remains at 100% of the poverty level. This affects where you fall in the system.
If you live in a state that has expanded Medicaid and your income is below 138% of the poverty level, you will typically be directed to Medicaid rather than offered a Premium Tax Credit. If you live in a state that has not expanded Medicaid, you may fall into a coverage gap — earning too much for Medicaid but too little to receive a Premium Tax Credit.
Your state's marketplace website lists the income thresholds that apply in your state. You can also call 211 or visit your state's Medicaid office to learn whether you are in a coverage gap.
How to verify your income limit before enrolling
Before you enroll in a marketplace plan, you can calculate your approximate income limit using the current year's federal poverty level. Multiply the poverty level for your household size by 4.00 to find the 400% threshold. If your expected income is below that number, you likely may have access to for the credit.
Your state's health insurance marketplace website has an income calculator tool. You enter your household size and expected income, and it shows whether you are within the range for the Premium Tax Credit and estimates your monthly credit amount. This is not a binding calculation — it is an estimate to help you understand your options.
If you are unsure whether your income qualifies, contact your state's marketplace directly. Representatives can answer questions about your specific situation and explain how changes in income would affect your credit.
Frequently Asked Questions
What happens if I earn more than 400% of the poverty level?
You will not receive a Premium Tax Credit. You can still purchase health insurance through the marketplace or directly from an insurer, but you will pay the full premium without any subsidy. Some people in this income range choose to buy coverage outside the marketplace.
Do I have to report my income every year?
Yes. Income limits and poverty levels change each year, so you must enroll or update your information during the annual open enrollment period. Even if your income has not changed, the thresholds have, and your credit amount may be different.
What if my income drops below 100% of the poverty level?
You may be directed to Medicaid instead of the Premium Tax Credit. In states that have expanded Medicaid, you can enroll in Medicaid at any time. In states that have not expanded Medicaid, you may not have coverage options through either program.
Can I get the Premium Tax Credit if I am self-employed?
Yes. Self-employment income counts toward your MAGI. You estimate your expected net self-employment income for the year when you enroll. At tax time, you report your actual income, and the IRS reconciles the difference.
Do dependent children count toward my household size for income limits?
Yes. Any person you claim as a dependent on your tax return is part of your household size for Premium Tax Credit purposes. A family of four has a higher income limit than a family of three, even if the adults earn the same amount.