IRS Announces 2023 Contribution Threshold for Premium Tax Credit Eligibility Purposes

The ARPA expanded the premium tax credit rules to provide a more generous ACA benefit for 2021 and 2022. Typically, the premium tax credit is available to taxpayers with household income between 100 percent and 400 percent of the federal poverty line. ARPA generally eliminated the upper income limit and increased the amount of the premium tax credit (the percentage of household income that individuals are required to contribute to their health insurance coverage decreased to 9.61% in 2022). For 2023, even more taxpayers may qualify for the tax credit because the IRS recently announced that the affordability threshold will decrease significantly, to 9.12% for 2023. This decrease means that many employers will be required to pay more for employee coverage in 2023 because employer-sponsored coverage will only be deemed affordable if the employee's required contribution for self-only coverage does not exceed 9.12% of the employee's household income. For more information on the premium tax credit income requirements, visit Tax Facts Online. : Q 8883. Note: Q is updated.