The subsidy cliff: where help stops completely
One dollar over 400% of the poverty guideline and the credit does not shrink — it disappears. For 2027 that line is $63,840 for one person.
Almost every threshold in the US tax code phases out gradually. This one does not. At 400% of the federal poverty guideline the premium tax credit does not taper — it stops. A single dollar of additional income can move a household from a subsidized premium to the full sticker price.
2026 HHS poverty guidelines, 48 contiguous states and DC, applied to 2027 coverage. Alaska and Hawaii figures differ — see below.
What the edge looks like
Take a single person in the lower 48 with income of $63,840. They are at exactly 400% of the poverty guideline, their applicable percentage is 10.22%, and their contribution toward the benchmark plan is capped at $544 a month.
Now give them $1 more. At $63,841 they are at 400.01% of the guideline — over the line — and the credit is gone. Not reduced. Gone. They now pay whatever the plan costs, and in a county where the benchmark runs $700 or $900 a month, that single dollar of income has cost them thousands of dollars over the year.
This is the arithmetic that makes the cliff dangerous: the loss is not proportional to the extra income. It is the size of the entire credit.
Where the line falls for your household
| Household size | 2026 guideline | 400% of it | Monthly cap just under |
|---|---|---|---|
| 1 person | $15,960 | $63,840 | $544 |
| 2 people | $21,640 | $86,560 | $737 |
| 3 people | $27,320 | $109,280 | $931 |
| 4 people | $33,000 | $132,000 | $1,124 |
| 5 people | $38,680 | $154,720 | $1,318 |
| 6 people | $44,360 | $177,440 | $1,511 |
| 7 people | $50,040 | $200,160 | $1,705 |
| 8 people | $55,720 | $222,880 | $1,898 |
Households above eight add $5,680 to the guideline for each additional person. Alaska: a single person's line is $79,800, a family of four's is $165,000.
Why it is back
The cliff is the original design of the law. Between 2021 and 2025 it was temporarily removed: enhanced credits capped everyone's contribution at 8.5% of income no matter how high the income went. Those enhanced credits expired at the end of 2025 and have not been restored. Legislation to extend them has been introduced and has not passed. So for 2027 the hard 400% line is in force again.
The practical effect is that a household which paid a capped premium in 2025 may face an unsubsidized one now, with no change in their own circumstances.
What can actually be done about it
The credit is calculated on modified adjusted gross income, so the question is whether income can legitimately be reduced below the line. Some options that genuinely lower MAGI:
- Contributing to a deductible traditional IRA or a self-employed retirement plan such as a SEP-IRA or solo 401(k).
- Contributing to a health savings account, if you are enrolled in a qualifying high-deductible plan.
- For the self-employed, timing invoices or deductible expenses across the year boundary.
Two things that do not work: taking income as a distribution rather than salary does not remove it from MAGI, and neither does moving money between your own accounts.
Whether any of this applies to you is a question for a tax professional looking at your actual return. We publish the thresholds; we are not your accountant, and the difference matters at this particular line.
If you are over the line anyway
You can still buy a marketplace plan — the cliff removes the credit, not your eligibility. And because you are paying full price, the county data matters more to you than to almost anyone: the number of insurers competing where you live is now the only thing holding your premium down. Check your county.