For some people covered by the Affordable Care Act, tax season can come with big surprises, including having to repay the government for premium subsidies they received in the previous year.
With more changes on the horizon, it will be important for people receiving subsidies in 2026 to track their income and take steps to protect themselves from such financial blows.
Let’s start with the basic mechanism of subsidies.
Participants pay a fixed percentage of their household income as health insurance premiums on a sliding scale, ranging from zero for very low-income earners to 8.5% for high-income earners by 2025. The rest is usually covered by subsidies paid directly to insurance companies.
The income calculation done during open enrollment is an estimate of how much income a household thinks it will earn in the next year. When filing taxes, ACA enrollees must reconcile the amount they received in subsidies with the amount they actually earned. If their income increases, they may be obligated to repay some of the subsidy.
However, please do not neglect submission. Recipients of ACA subsidies are required to file tax returns regardless of their income, making this even more important. The Trump administration has already excluded those who have not filed their tax return for two consecutive years from qualifying for the subsidy, and has proposed lowering the number to one year.
Be careful of sudden tax charges
All enrollees who received ACA coverage subsidies in 2025, more than 90% of whom received at least some assistance, must include a special Form 8962 on their tax returns. This form is used to match a person’s actual income to the amount of subsidy received, and the IRS mails the information on a separate 1095-A form. The amount of your subsidy is based in part on the income projections you made when you enrolled in your ACA plan.
And it can come as a surprise. Some people may feel they can get their money back if their income is less than expected. However, if your income exceeds the original estimate or the latest estimate, you will probably be less eligible for aid and will have to pay the money back.
Organizations that help people pay their taxes say it’s not always easy to accurately estimate next year’s income, especially for people who run their own businesses, work multiple jobs or have jobs with variable hours.
Customers will say, “Next year I’m going to make between $20,000 and $45,000, but I don’t know.” said Katie Alexander, director of training and volunteering for the Health and Economic Opportunity Program at Pisgah Legal Services. Pisgah Legal Services is a nonprofit organization in western North Carolina that provides free tax and health insurance to low-income individuals.
Still, the taxes currently filed for the 2025 tax year have a cap on how much most people will have to pay back.
The cap is $375 for a single person with an income of less than $31,300 in 2025, which is twice the federal poverty level. Based on this sliding scale, the maximum debt for a person at the high end of the range is $1,625 for an individual and $3,250 for a family.
There is no repayment limit for those earning more than four times the federal poverty level ($62,600 total for an individual and $106,600 total for a family of three in 2025), so they can repay any amount in excess of their eligibility.
“That amount is really surprising to people,” Alexander said.
A woman who helped Pisgah officials compile her 2025 taxes earned just over $50,000, more than originally estimated. Alexander said her maximum repayment was $1,625. Without this cap, she would have owed $4,000, a significant portion of her annual income.
Plan ahead: rules get even stricter next tax season
Congressional Republicans’ One Big Beautiful Bill Act, signed by President Donald Trump last summer, removed those repayment caps. That means there will be no sliding scale limit on the amount of subsidy repayments in 2026 if your income is higher than expected come tax season next year.
“It would be really devastating,” Alexander said.
There are at least two other things to keep in mind. Both stem from enhanced COVID-19-era tax credits, which expired late last year because Congress did not extend them. For one, the amount of household income people have to pay in premiums this year before the subsidy kicks in has risen by just over 2% for low-income earners and up to nearly 10% for higher-income earners.
Second, households with incomes more than four times the federal poverty level are no longer eligible for ACA subsidies.
The hardest hit financially will be enrollees whose annual incomes have increased to more than four times the poverty level. In that case, they would be obligated to repay the full amount of the subsidy they received in 2026.
That may be a lot.
For example, the average monthly premium for ACA coverage was $619 in 2025, but the average enrollee received enough subsidies to offset all but $74 of that amount, according to the Peterson KFF Health System Tracker.
Some people have other ideas. People are paying twice as much in premiums on average this year because the enhanced credit wasn’t extended, so they may be looking to increase their income to cover that cost. A recent poll by KFF found that 43% of people who remain insured this year plan to work more hours or take an additional job to cover their costs.
“That makes sense, but there’s a risk that you’ll qualify for less in the subsidy than you expected, or even have to pay back the entire tax credit,” said Cynthia Cox, senior vice president and ACA program director at KFF, a health information nonprofit that includes KFF Health News.
People can update their estimated income on the Marketplace website as their income changes during the year.
Pisgah officials are calling people they’ve worked with and telling them, “Please, please, if your income changes, please call us so we can adjust your income through the marketplace,” Alexander said.
As much as possible, try to figure out your annual income. This is not easy, especially for workers who do not have a job that pays them a regular salary.
“If you’re meeting with a CPA to talk about taxes, make sure you have the conversation to make sure you have enough income to pay the costs or not enough to disqualify you from the subsidy,” Cox said. “Contributing to a retirement plan or health savings account can reduce the portion of your income that counts towards your eligibility for subsidies.”
Some may decide to reduce their working hours or give up on new client engagements.
“If taking an extra shift would put you above 400 percent of the federal poverty level and cost you $10,000 in repayments, you probably shouldn’t take that shift,” said Jason Levitis, a senior fellow at the Urban Institute who studies the ACA and tax issues.
Are you struggling to pay for health insurance? Have you decided to give up on the interview? Click here to contact KFF Health News and share your story.
