IRS Announces 2027 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 2027, the IRS recently announced in Revenue Procedure 2026-26 that the affordability threshold will increase to 10.22% in 2026 (up from 9.96% for 2026). This increase means that employer-sponsored coverage will only be deemed affordable in 2027 if the employee's required contribution for self-only coverage does not exceed 10.22% of the employee's household income. Because the affordability percentage increased for 2027, 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.