The Basic Income and Citizenship Requirements

To receive an ACA tax credit, you must be a U.S. citizen or may have access to immigrant, live in the United States, and have a household income between 100% and 400% of the federal poverty line (some states allow credits up to 600%). Your income is measured for the year you claim the credit, not the year you buy insurance. If you earned $30,000 in 2023, that is the income used to determine your 2023 credit, even if your earnings change in 2024.

You cannot claim a tax credit if someone else claims you as a dependent on their tax return. If you are a dependent on your parent's return, you do not get your own credit — your parent may be able to claim it instead. You also cannot receive the credit if you are incarcerated or if you have access to affordable employer coverage or other government insurance like Medicare or Medicaid (with limited exceptions for Medicaid in certain states).

Key Takeaways

  • Your household income for the year you buy insurance determines whether you can receive a credit, and the amount of that credit.
  • You must be a U.S. citizen or may have access to immigrant; undocumented immigrants cannot receive ACA tax credits.
  • If you are claimed as a dependent on someone else's tax return, you cannot claim your own credit.
  • Having access to affordable employer health insurance or Medicare typically disqualifies you from the credit.
  • Income limits change each year based on federal poverty guidelines, so you should check current limits before assuming you do not may have access to.

How Income Is Counted and What "Household" Means

The IRS counts your modified adjusted gross income (MAGI) to determine your credit. For most people, MAGI is the same as adjusted gross income on your tax return. It includes wages, self-employment income, interest, dividends, rental income, and Social Security benefits (if you file a joint return). It does not include certain types of income like child support received or some tribal distributions.

Your household includes you, your spouse if you file jointly, and anyone you claim as a dependent — even if they do not have income. If you are married but file separately, you cannot claim a tax credit. If you have a child, that child counts as part of your household for income purposes, which can lower your income percentage and increase your credit amount.

Citizenship and Immigration Status

You must be a U.S. citizen or a may have access to immigrant to receive a tax credit. may have access to immigrants include lawful permanent residents (green card holders), refugees, asylees, Cuban/Haitian entrants, and certain other visa holders. The specific visas and statuses that may have access to are listed on the Healthcare.gov website and change based on federal law.

If you are unsure whether your immigration status qualifies, you can enter your status on the Healthcare.gov application during enrollment, and the system will tell you whether you are may be able to access. You will need to provide documentation of your status when you apply for coverage. Undocumented immigrants cannot receive ACA tax credits, though they may be able to buy unsubsidized coverage through the marketplace.

When Employer Coverage Blocks Your Credit

If your employer offers health insurance and that coverage is considered affordable and provides minimum value, you cannot claim a tax credit. Affordable means the employee's share of the premium for self-only coverage does not exceed a certain percentage of household income (this percentage changes yearly). Minimum value means the plan covers at least 60% of the cost of covered services.

If your employer's plan is unaffordable or does not meet minimum value, you may still be able to claim a credit for marketplace coverage. You will need to report the employer coverage details when you apply. Some people turn down employer coverage specifically to buy marketplace insurance with a tax credit, which is allowed, but you must report that you declined the employer plan.

Self-Employment and Variable Income

If you are self-employed, your tax credit is based on your projected net self-employment income for the year. You estimate this income when you apply for coverage, and the credit is calculated based on that estimate. If your actual income turns out to be different, you reconcile the difference when you file your tax return the following year.

If your income is unpredictable or you expect it to change during the year, you can update your application on Healthcare.gov whenever your circumstances change. Updating your income estimate can increase or decrease your monthly credit amount. Many self-employed people update their income multiple times per year as their business earnings become clearer.

Income Limits for the Current Year

The income thresholds for ACA tax credits are set each year based on the federal poverty line. For 2024, the limits vary by family size and state. A single person with income above 400% of the poverty line (roughly $54,000 to $56,000 depending on the state) generally does not may have access to for a credit. A family of four with income above 400% of poverty (roughly $111,000 to $115,000) also does not may have access to.

Some states have expanded the upper income limit to 600% of poverty, which means higher-income households in those states may still receive a credit. You can find the exact income limits for your household size and state on Healthcare.gov or by contacting your state's insurance marketplace. Income limits are adjusted each November for the following year.

Special Situations: Students, Dependents, and Married Filers

If you are a full-time student and your parent claims you as a dependent, you cannot claim your own tax credit. Your parent may be able to claim a credit that covers you, but only if they include you in their household income calculation. If your parent does not claim you as a dependent, you can claim your own credit based on your own income.

If you are married, you must file a joint tax return to claim a credit. If you file separately, neither spouse can claim a tax credit, even if one spouse has low income and the other has high income. This rule applies even if you are legally married but living apart.

Frequently Asked Questions

What if my income is below 100% of the poverty line?

You may not may have access to for an ACA tax credit, but you may may have access to for Medicaid instead. Medicaid income limits vary by state. In states that expanded Medicaid, the limit is usually around 138% of poverty. In states that did not expand, limits are lower. Contact your state Medicaid office or use Healthcare.gov to check your state's Medicaid rules.

Can I get a tax credit if I have Medicare?

No. If you are enrolled in Medicare, you cannot claim an ACA tax credit for marketplace coverage. You can only have one form of primary health insurance. However, if you are not yet 65 and become may be able to access for Medicare due to disability, you may have a special enrollment period to make changes.

What happens if my income changes after I buy insurance?

You should update your income on Healthcare.gov as soon as possible. If your income increases, your credit may decrease, and you could owe money back when you file taxes. If your income decreases, your credit increases, and you may get a refund. Updating promptly helps you avoid a large bill at tax time.

Does child support I receive count toward my income?

No. Child support received does not count as income for ACA tax credit purposes. However, child support you pay does not reduce your income either. Only earned income, self-employment income, investment income, and certain other sources count toward your MAGI.

Can I claim a tax credit if I am on disability?

Yes, if you meet the income and citizenship requirements. Disability status itself does not affect your credit. However, if you receive Social Security Disability Insurance (SSDI), that income counts toward your household income. If you receive Supplemental Security Income (SSI), that does not count as income for credit purposes.