Eligibility for the Premium Tax Credit

You may be allowed a Premium Tax Credit if:

• You or a tax family member enrolled in health insurance coverage through the Marketplace for at least one month of a calendar year in which the enrolled individual was not eligible for affordable coverage through an eligible employer-sponsored plan that provides minimum value or eligible to enroll in government health coverage – like Medicare, Medicaid, or TRICARE.
• The health insurance premiums for at least one of those same months are paid by the original due date of your return. They can be paid either through advance credit payments, by you, or by someone else.
• You are within certain household income limits. For 2021, if you, or your spouse (if filing a joint return), receive, or is approved to receive, unemployment compensation for any week beginning during 2021, your household income is considered to be within these limits.
• You do not file a married filing separately tax return.
  • There are exceptions for certain victims of domestic abuse and spousal abandonment. For more information about these exceptions, see the Premium Tax Credit questions and answers.
• You cannot be claimed as a dependent by another person.

You are not eligible for the premium tax credit for coverage purchased outside the Marketplace. Use the "Am I Eligible to Claim the Premium Tax Credit" interview tool to see if you may qualify for the premium tax credit.

Income criteria

2021 Unemployment Compensation. If you, or your spouse (if filing a joint return), received, or were approved to receive, unemployment compensation for any week beginning during 2021, the amount of the your household income is considered to be no greater than 133% of the federal poverty line for your family size and you are considered to have met the household income requirements for being allowed a premium tax credit.

2021 and 2022 Premium Tax Credit Eligibility. For tax years 2021 and 2022, the American Rescue Plan of 2021 (ARPA) temporarily expanded eligibility for the premium tax credit by eliminating the rule that a taxpayer is not allowed a premium tax credit if his or her households income is above 400% of the Federal Poverty Line.

To be eligible for the premium tax credit, your household income must be at least 100 percent and, for years other than 2021 and 2022, no more than 400 percent of the federal poverty line for your family size, although there are two exceptions for individuals with household income below 100 percent of the applicable federal poverty line. Remember that simply meeting the income requirements does not mean you're eligible for the premium tax credit. You must also meet the other eligibility criteria.

For information about the two exceptions for individuals with household income below 100 percent of the federal poverty line, see the instructions to Form 8962.

Here are some things to remember about how your household income affects your premium tax credit:

• The amount of the premium tax credit is based on a sliding scale, with generally greater credit amounts available to those with lower household incomes. 
• If the advance credit payments made on your behalf are more than the allowed premium tax credit, you will have to repay some or all the excess for any tax year other than 2020. If your household income is 400 percent or more of the federal poverty line for your family size, you will have to repay all of your excess advance credit payments for that tax year.
• If your projected household income is close to the 400 percent upper limit, be sure to carefully consider the amount of advance credit payments you choose to have paid on your behalf. 
• For tax years other than 2021 and 2022, if your household income on your tax return is more than 400 percent of the federal poverty line for your family size, you are not allowed a premium tax credit and will have to repay all of the advance credit payments made on behalf of you and your tax family members.  

See the instructions to Form 8962, Premium Tax Credit (PTC), for information about the federal poverty guidelines for purposes of claiming the premium tax credit.

The federal poverty guidelines are sometimes referred to as the "federal poverty line" or FPL. The Department of Health & Human Services (HHS) determines the federal poverty guideline amounts annually.

HHS provides three federal poverty guidelines: one for residents of the 48 contiguous states and Washington D.C., one for Alaska residents, and one for Hawaii residents. For purposes of the premium tax credit, eligibility for a certain year is based on the most recently published set of poverty guidelines at the time of the first day of the annual open enrollment period for coverage for that year. Consequently, the federal poverty guidelines published in January of 2020 are used for premium tax credit eligibility for 2021.

Taxpayers are reminded to keep supporting documents about their income, including any supporting documentation received from their state concerning their receipt of or approval for unemployment compensation, with their tax records.

Filing electronically is the easiest way to file a complete and accurate tax return. Electronic filing options include free volunteer assistance, IRS Free File, commercial software and professional assistance.

Other criteria

Aside from your income, there are other factors that affect the credit amount, including:

• Cost of available insurance coverage
• Where you live
• Your address
• Your family size

Married filing separately

If you are married and you file your tax return using the filing status married filing separately, you will not be eligible for the premium tax credit unless you are a victim of domestic abuse and spousal abandonment and can meet certain criteria. Details regarding this relief are in the instructions for Form 8962 and Publication 974.

Generally, a taxpayer who lives apart from his or her spouse for the last six months of the tax year is considered unmarried if the taxpayer files a separate return, maintains a household that is also the main home of the taxpayer's dependent child for more than half the year, and furnishes more than half the cost of the household during the tax year.