Premium tax credit
Most calculators give you a number and no receipts. This one shows the federal poverty level band, the applicable percentage and the benchmark premium it used, so you can check it.
Household income divided by the federal poverty level for your household size, expressed as a percentage. Alaska and Hawaii use higher schedules.
An IRS schedule turns that percentage into the share of income you are expected to contribute. It interpolates smoothly inside each band rather than jumping.
The second-lowest-cost Silver plan available to you, age-rated across your household on the federal standard curve, capped at the statutory 3:1 band.
Benchmark premium minus expected contribution. Because it is fixed to the benchmark, moving to a cheaper plan means you keep the whole credit.
This is the table the whole calculation turns on. Find your income as a share of the federal poverty level, read across, and that is the fraction of your income the government expects you to put toward the benchmark plan. Everything above it is the credit.
| Household income | You contribute | What it means |
|---|---|---|
| Under 133% | 2.10% | Flat. Most people here are Medicaid eligible instead. |
| 133% to 150% | 3.14% to 4.19% | Silver 94 cost-sharing applies. The richest plans on the exchange. |
| 150% to 200% | 4.19% to 6.60% | Silver 87 cost-sharing applies. |
| 200% to 250% | 6.60% to 8.44% | Silver 73 cost-sharing applies. The last band that gets it. |
| 250% to 300% | 8.44% to 9.96% | Premium help only from here up. |
| 300% to 400% | 9.96% | Flat again, right up to the cliff. |
| Over 400% | No credit | The subsidy cliff. Full price, whatever the premium is. |
Percentages interpolate linearly inside each band, so an income at 175% of the poverty level lands halfway between 4.19% and 6.60%. The schedule is indexed annually.
The part people miss
Cost-sharing reductions quietly upgrade a Silver plan into a much richer version of itself, and they attach to Silver only. Someone at 140% of the poverty level who buys Bronze because the premium looked lower has walked past a plan better than Platinum at the Silver price.
Compare plans| Income | Plan becomes | Plan pays | Deductible | Out-of-pocket max |
|---|---|---|---|---|
| Under 150% FPL | Silver 94 | 94% | $250 | $3,050 |
| 150% to 200% FPL | Silver 87 | 87% | $800 | $3,300 |
| 200% to 250% FPL | Silver 73 | 73% | $3,300 | $6,600 |
| Over 250% FPL | Standard Silver | 70% | $4,800 | $8,100 |
The credit is advanced monthly against a projection. Earn more and you repay the difference on Form 8962. Repayment is capped by income band, which softens it considerably, but the caps vanish entirely once you cross 400% of the poverty level. Then the whole amount is owed.
What to do: report income changes when they happen, not in April. It takes about ten minutes and it re-prices the credit going forward instead of accruing a bill.
The opposite case is genuinely good news. If your actual income came in under the projection you were entitled to a larger credit than you received, and the difference comes back as a refundable credit when you file. Self-employed people with uneven years land here often.
What to do: keep Form 1095-A from your carrier. Reconciliation is impossible without it and the IRS will hold the return until it arrives.