Possible to Lower Income in Order to Receive Premium Tax Credit by Contributing to Tax Preferred Accounts?

Forum|Forum|3 months ago
April 15, 2026
1 reply
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Is it true that there is no safe harbor for not making enough income to receive the premium tax credit starting in 2026? And that starting in 2026 there are no caps on repayment of premium tax credit? And if you made too much income (over 400% of FPL?), could putting money into an IRA, 401(k), or HSA bring your income back below so that you could still receive the premium tax credit in 2026?

Not A Product Question

Vanessa A

Level 15

Yes. It is true that under current law, the repayment cap has been removed for 2026 by Section 71305. So if you receive too much of a credit in 2026, you could potentially have to pay back the entire Premium Tax Credit you received throughout the year.

Yes. Contributing to an IRS, 401K or HSA could bring your MAGI back below the 400%. This could lower or eliminate the repayment of the credit depending on your specific situation. Since the credit is based on ranges, if you were in the estimated range of 250% but ended up at 399%, you would still have to repay the difference between what you received and should have actually received without the cap of previous years. Also, remember though there are contribution limits and over-contributing can lead to a penalty.

For those making less than 100% of FPL, if they acted in good faith when giving their estimate, this safe harbor has NOT been repealed. So, for someone who makes less than 100% of FPL but legitimately estimated they would make more, they will still fall under this safe harbor.

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