The 2027 ACA Subsidy Cliff: One Dollar Over $63,840 Costs a Single Person the Whole Credit, $3,676 a Year at an $850 Benchmark

For 2021 through 2025 the ACA premium tax credit had no upper income limit. That rule was written to expire with tax year 2025 (26 U.S.C. 36B(c)(1)(E)), and as far as I could find Congress has not renewed it, although the House passed a three-year extension on January 8, 2026. So for 2026 and 2027 the original rule is back: a household whose income is more than 400% of the federal poverty line gets no credit at all, not a smaller one. Open enrollment for 2027 coverage is the moment households that live on income they control (early retirees, freelancers, people between jobs) pick the number they will tell the Marketplace. This guide puts dollars on the line using the engine behind the ACA subsidy calculator: where the line is, what an extra $1,000 costs on the way to it, and how much more income you need once you are over it just to be where you were.

Where the line is, by household size

The line is 4 times the poverty line for your household size, and the poverty line is the one HHS published the January before the coverage year (26 CFR 1.36B-1(h); 36B(d)(3)(B)): the 2025 guidelines for 2026 credits, the 2026 guidelines for 2027. Income exactly at the line still qualifies. Household size means you, a spouse and the people you claim as dependents.

Alaska and Hawaii use higher guidelines and so have higher lines; the calculator has both.

What an extra $1,000 costs on the way up

Below the line the credit does not vanish, it shrinks, because the share of income you are expected to pay toward the benchmark plan climbs with income. For 2027 (Revenue Procedure 2026-26) that share goes from 2.15% of income below 133% of the line, in a straight line within each band, to 10.22% at 300% and it stays there up to 400%. The credit is the benchmark premium minus that share, so every extra dollar of income costs the share, plus the amount by which the share itself rises. Table for one person with the $850-a-month benchmark (an assumption, not a market average) and the 2026 federal brackets as a stand-in for 2027:

Between 250% and 300% of the line ($45,000 is 281%) the share is still rising, so each $1,000 costs $197 of credit, the most in the table. From 300% to the line it is flat at 10.22%, about $102 a thousand. Add the 10% or 12% federal bracket and the total is 22% to 32% of each extra dollar, before state tax. (Form 8962 reads the percentage of the line as a whole number, so the credit also moves in small steps, a few dollars up to about $15, at each full percentage point, which is why the figures in a column are not perfectly smooth.)

One dollar over the line

Past 400% the credit is zero, however small the overshoot (36B(c)(1)(A)). With the same assumptions the credit at $63,840 is $3,676 a year, so the dollar after it costs that. Starting from $55,000 of income and adding extra ordinary income (a Roth conversion, a traditional IRA withdrawal, a capital gain taxed at ordinary rates here), this is what you keep of each extra amount after the added federal tax and the lost credit:

The line sits $8,840 above $55,000. Keeping $6,876 at the line, you do not match it again until about $13,212 of extra income ($68,212 in all): the $3,676 of credit that the first dollar over takes has to be earned back after tax, and past $66,500 of income the 22% bracket applies, which is why it takes $4,372 of extra income beyond the line rather than the $4,177 it would at 12%. Income between the line and that point leaves you worse off than stopping at the line. Whether more income is worth it depends on what it buys (a conversion that avoids tax later, a sale you need) and on the rest of your finances; this table prices only the premium credit and the federal tax.

If you estimate low

Most people take the credit in advance, month by month, from the income they estimate when they enroll. The return then recomputes it on the income you really had (Form 8962), and any excess is added to your tax (36B(f)(2)). Until 2025 that repayment was capped for households under 400% of the line; Public Law 119-21 removed the caps from 2026, so the whole excess is due. A single person who estimates $45,000 (an advance credit of $5,866 a year on the $850 benchmark) and ends 2027 with $70,000 is over the $63,840 line, has a real credit of $0 and repays all $5,866. The Marketplace lets you update the income estimate during the year, which changes the advance payments for the remaining months.

What counts toward the line

Household income is adjusted gross income plus tax-exempt interest, untaxed Social Security benefits and excluded foreign income, for you, your spouse and any dependent who has to file (36B(d)(2)). It is a calendar-year figure. In practice that means the things you can time, such as how much of a traditional IRA you convert or withdraw in a year and when you sell investments at a gain, count in the year they happen, and the things that lower adjusted gross income count against it. Tax-free Roth contributions withdrawn do not count; the Roth IRA withdrawal calculator shows which dollars those are, and the conversion ladder guide prices the income-tax side of the same decisions. This guide does not tell anyone what to do with that: it shows the price.

What this guide leaves out

• The premium. $850 a month is an assumption; benchmark premiums depend on age, county and insurer, and the 2027 filings were not read. The calculator takes yours from the Marketplace's window shop, and the line does not move with it, only the dollars at stake.
• Whether you can get the credit at all: Medicaid and CHIP, employer coverage that is affordable (10.22% of income for 2027, Revenue Procedure 2026-26), Medicare, married filing separately, and the tighter immigration rules from 2027 in Public Law 119-21.
• Federal brackets for 2027, which the IRS has not published: the 2026 brackets and standard deduction ($16,100) stand in, and the shape of the table (not its exact dollars) is the point. State income tax, the net investment income tax and any other credit are not included, and all the extra income is treated as ordinary income.
• Law that could change before enrollment closes or during 2027. If Congress renews the larger credits, none of this applies; check the news and use the calculator's year switch for 2026 as well.

Estimates, not tax advice, financial advice or insurance advice: the Marketplace decides your actual credit, and a tax professional can tell you what your own return will show.