- The IRS established 2027 premium percentages through Revenue Procedure 2026-26 for health insurance tax credits.
- The subsidy cliff returns, meaning households over 400 percent of the poverty level no longer qualify.
- New restrictions will end credit eligibility for refugees and those with Temporary Protected Status in 2027.
The Internal Revenue Service released Revenue Procedure 2026-26 on July 21, 2026, establishing the income-based percentages used to calculate the 2027 Premium Tax Credit. The procedure covers tax years beginning in 2027.
The percentages determine how much household income a taxpayer is expected to put toward health insurance premiums. The IRS also set the employer-coverage affordability percentage at 10.22% for plan years beginning in 2027.
A major eligibility limit returns. Households earning more than 400% of the federal poverty level will fall outside the federal premium subsidy program.
Free toolSubstantial Presence Test CalculatorThe subsidy cliff is back.
The changes follow health and tax provisions in Public Law 119-21, also called the “Working Families Tax Cut” or “One Big Beautiful Bill Act.” The law ends the enhanced subsidies provided between 2021 and 2025 and changes eligibility for some immigrants.
The 2027 table raises the required share as income climbs
The applicable percentage rises through most income bands, reaching 10.22% for households between 300% and 400% of the federal poverty level. Households above 400% receive no percentage under the table because they no longer qualify for the federal credit.
| Household income as a percentage of FPL | 2027 initial percentage | 2027 final percentage |
|---|---|---|
| Less than 133% | 2.15% | 2.15% |
| 133%–150% | 3.23% | 4.30% |
| 150%–200% | 4.30% | 6.78% |
| 200%–250% | 6.78% | 8.66% |
| 250%–300% | 8.66% | 10.22% |
| 300%–400% | 10.22% | 10.22% |
| Over 400% | N/A | N/A |
The percentages represent the share of household income used in the premium calculation. The applicable table covers tax years beginning in 2027.
Excess advance credits must be repaid in full
The repayment rules also change. As of tax year 2026, the cap on repaying excess Advance Premium Tax Credits no longer applies.
Taxpayers must repay the full excess subsidy if their year-end income exceeds the amount projected when they received advance assistance. Income changes during the year can therefore increase the amount due when the credit is reconciled.
The rule applies to excess assistance, not just the monthly premium charged by an insurer. Taxpayers who receive more advance credit than their final income supports face repayment of the entire excess amount.
Immigration restrictions begin January 1, 2027
The law limits premium tax credit eligibility to a narrower immigrant group. Starting January 1, 2027, people with refugee status, asylum status, or Temporary Protected Status will no longer qualify for the credit.
Eligible groups include U.S. citizens, lawful permanent residents, Cuban/Haitian entrants, and COFA migrants. The change removes access for several categories that previously could qualify when other requirements were met.
A separate low-income restriction applies in 2026. Lawfully present immigrants earning below 100% of the federal poverty level who do not qualify for Medicaid cannot receive the credit.
The Department of Homeland Security addressed related Medicaid eligibility changes in a July 16, 2026, finalized public-charge rule. DHS said federal matching payments will be limited to groups listed in section 1903(v)(5) of the Social Security Act beginning October 1, 2026, under section 71109 of the law.
DHS stated:
“DHS agrees Medicaid eligibility among aliens is limited, and the availability of federal matching payments. will be limited to the groups enumerated in section 1903(v)(5) of the Social Security Act, beginning October 1, 2026.”
Higher premiums and more verification are expected
Marketplace enrollees are projected to face out-of-pocket premium increases of over 33% between 2025 and 2027. The projection reflects the expiration of enhanced credits and the new indexing rules.
The Congressional Budget Office estimates that the eligibility restrictions could leave approximately 1.4 million lawfully present immigrants uninsured by 2027.
Applicants will also face more frequent income and immigration-status checks under new HHS rules for 2027. Those checks add administrative work for low-income applicants seeking coverage or continuing assistance.
HHS Secretary Robert F. Kennedy, Jr., discussed the law’s health reforms on December 8, 2025. He said:
“Federal programs that foster community engagement help American citizens live healthy and fulfilling lives. these tools restore the dignity of work while supporting the sustainability of Medicaid for the most vulnerable.”
The new percentages will govern premium calculations for plan years beginning in 2027. The repayment change already applies to tax year 2026, while the immigration restrictions begin January 1, 2027.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
