IRS Announces 2026 Contribution Threshold for Premium Tax Credit Eligibility Purposes

Typically, the Affordable Care Act's premium tax credit is available to taxpayers with household income that falls between 100% and 400% of the federal poverty line. For 2026, the IRS recently announced in Revenue Procedure 2025-25 that the affordability threshold will increase to 9.96% in 2026 (up from 9.02% for 2025). This increase means that employer-sponsored coverage will only be deemed affordable in 2026 if the employee's required contribution for self-only coverage does not exceed 9.96% of the employee's household income. Because the affordability percentage increased for 2026, employers can elect to increase required employee contributions for employer-sponsored health insurance without incurring penalties, so long as they continue to be deemed affordable based on the new percentage. However, because the margin of change remains small, employers should carefully calculate rates to avoid penalties. For more information on the premium tax credit and eligibility rules, visit Tax Facts Online. Read More: Link to Q8822. Note: Q450, 8822 and 8883 are updated.