ACA Taxes and Premium Tax Credits: 2025 and 2026 Rules

• Dan O'Donnell
• February 24, 2025
• 6 min read

The ACA premium tax credit helps eligible households pay for Marketplace health insurance. Its rules differ between tax year 2025 and tax year 2026. Use the coverage year’s rules when preparing your return, even if you file in the following calendar year.

Is there a federal penalty for being uninsured?

The federal individual shared responsibility payment has been zero since 2019. You do not claim a federal coverage exemption on Form 8965 for a 2025 or 2026 return. Some states and the District of Columbia have separate coverage requirements, penalties, or exemptions, so check the applicable state tax instructions.

What changed for premium tax credits?

Other eligibility conditions and exceptions apply. The credit depends on household income, family size, enrollment, and benchmark premiums. The enhanced credit provisions through 2025 should not be treated as permanent. See the IRS premium tax credit FAQ.

How employer coverage affects eligibility

An affordable employer offer that provides minimum value can prevent a Marketplace credit even if you decline it. The employee affordability test generally uses self-only coverage. For family members, the relevant family coverage cost is used under rules effective since 2023. An affordable employee-only offer does not automatically mean family coverage is affordable.

Enrollment in employer-sponsored minimum essential coverage generally prevents a credit for that person for the same month. Our Form 1095-C guide explains the employer information to review.

Reconcile advance payments each year

If advance credits paid part of your premiums, use Form 1095-A to prepare Form 8962. The form compares the credit allowed using actual annual information with the amount paid in advance. Excess advance credits can increase tax owed; an additional allowed credit can increase a refund or reduce tax.

Report income and household changes to the Marketplace during the year. This is especially important for 2026 because excess advance credits no longer receive the previous income-based repayment caps. Missing reconciliation can also affect access to advance credits in a later year.

Coordinate deductions and credits

A self-employed health insurance deduction can interact with the credit calculation. Follow IRS Publication 974 rather than deducting the same premiums twice. Pretax payments and tax-free reimbursements also cannot be claimed again as itemized medical expenses.

What should you retain?

Keep Marketplace statements, employer coverage offers, premium payment records, and documents supporting income and family changes. If you need extra time, a timely personal tax extension extends the filing deadline, but does not extend the payment deadline. Review state tax extension requirements separately.