2016 Premium Tax Credit
For 2016, the Premium Tax Credit is 2.03% (Lowest applicable percentage) and 9.66% (Highest applicable percentage).
Effective 2016-01-01Source: Rev. Proc. 2014-62 (IRS)Verified 2026-08-29
Who it applies to
The table matters to anyone claiming the premium tax credit under § 36B for a taxable year beginning in 2016. Household income, measured as a share of the Federal poverty line, decides which band applies; the applicable percentage for that band is the share of household income the taxpayer is expected to put towards the benchmark plan, and the credit covers the rest of the premium. At the bottom of the schedule that expected share is 2.03%. At the top band the table covers it is 9.66%, and the table states no percentage above that band. This is the credit's own table and it is separate from the required contribution percentage in the same revenue procedure, which is about employer coverage.
What changed this year, and why
Rev. Proc. 2014-62 sets the applicable percentage table under § 36B for taxable years beginning in 2016. The table is arranged by household income as a share of the Federal poverty line, and each band carries an initial and a final percentage. In the lowest band the two are the same, at 2.03%, and in the highest band the table covers they are the same again, at 9.66%. The bands in between run between those two figures. The revenue procedure indexes the table using the methodology described in Rev. Proc. 2014-37.
Common questions
- What is the premium tax credit applicable percentage for 2016?
- It is a table rather than one figure. For taxable years beginning in 2016 the applicable percentage table under § 36B starts at 2.03% for the lowest household income band and reaches 9.66% in the highest band the table covers. The bands in between carry an initial and a final percentage that differ from each other.
- What does the applicable percentage actually do?
- It sets the share of household income a taxpayer is expected to contribute towards the benchmark plan premium. The premium tax credit is the difference between that expected contribution and the benchmark premium, so a lower applicable percentage means a larger credit for the same premium.
- Why does each band have two percentages?
- The table gives an initial and a final percentage for each band so the rate can slide across the band with income rather than jumping at its edge. Only at the bottom of the schedule and in the highest band the table covers are the initial and the final percentage the same, which is why those two are the figures published here.
- Where does the 2016 table come from?
- Rev. Proc. 2014-62, issued by the IRS, provides the applicable percentage table for taxable years beginning in 2016 for the purposes of § 36B. It indexes the table using the methodology described in Rev. Proc. 2014-37.
Who counts as an applicable taxpayer
To claim the Premium Tax Credit for 2016, you must file Form 8962 with your income tax return if you are taking the PTC, if APTC was paid for you or another individual in your tax family, or if APTC was paid for an individual for whom you told the Marketplace you would claim a personal exemption and neither you nor anyone else claims a personal exemption for that individual. You must file an income tax return and attach Form 8962 even if you are not otherwise required to file. You must use Form 1040, Form 1040A, or Form 1040NR. You cannot file Form 1040EZ, Form 1040NR-EZ, Form 1040-SS, or Form 1040-PR. If someone else enrolled an individual in your tax family in coverage and APTC was paid for that individual's coverage, you must file Form 8962 to reconcile the APTC. You need to obtain a copy of the Form 1095-A from the person who enrolled the individual. If you are claimed as a dependent on another person's tax return, the person who claims you will file Form 8962 to take the PTC and, if necessary, repay excess APTC for your coverage. You do not need to file Form 8962.
Who Must File You must file Form 8962 with your income tax return (Form 1040, Form 1040A, or Form 1040NR) if any of the following apply to you. You are taking the PTC. APTC was paid for you or another individual in your tax family. APTC was paid for an individual (including you) for whom you told the Marketplace you would claim a personal exemption and neither you nor anyone else claims a personal exemption fo
2016 Instructions for Form 8962, Premium Tax Credit (IRS)
Household income is not the same as your AGI
For purposes of the Premium Tax Credit, household income is the modified adjusted gross income (modified AGI) of you and your spouse if you are filing a joint return, plus the modified AGI of each dependent who is required to file a tax return because his or her income meets the filing threshold. Modified AGI is the AGI on your return plus certain untaxed amounts such as foreign earned income, tax-exempt interest, and the nontaxable portion of social security benefits. Household income does not include the modified AGI of dependents who are filing a return only to claim a refund of withheld or estimated tax. Because household income includes more than just the AGI reported on your tax return, it can be higher than the AGI figure alone. The applicable percentages that determine your required premium contribution, from the lowest applicable percentage of 2.03% to the highest applicable percentage of 9.66%, are applied to this household income figure to arrive at the contribution amount used in the credit calculation.
Household income. For purposes of the PTC, household income is the modified adjusted gross income (modified AGI) of you and your spouse (if filing a joint return) (see Line 2a, later) plus the modified AGI of each individual whom you claim as a dependent and who is required to file an income tax return because his or her income meets the income tax return filing threshold (see Line 2b, later). Household income does not include the modified AGI of those individuals whom you claim as dependents and who are filing a 2016 return only to claim a refund of withheld income tax or estimated tax.
2016 Instructions for Form 8962, Premium Tax Credit (IRS)
The second lowest cost silver plan sets the credit
The benchmark plan used to figure your credit each month is the second lowest cost silver plan (SLCSP) offered through the Marketplace in the rating area where you reside that covers your coverage family. The applicable SLCSP premium is not the same as the enrollment premium you actually paid, unless you happened to enroll in that exact plan. Form 1095-A, Part III, column B, generally reports the applicable SLCSP premium, but it may be wrong or blank if no advance credit was paid, if you did not report a change in circumstances to the Marketplace, or if you had a change in family composition during the year. You must determine the correct applicable SLCSP premium yourself when you complete Form 8962; you do not need to request a corrected form from the Marketplace. The credit for each month is the excess of the applicable SLCSP premium over your monthly contribution amount, which is the portion of household income you would pay toward that benchmark plan using the applicable percentage from the lowest of 2.03% up to the highest of 9.66%.
Applicable SLCSP premium. The applicable SLCSP premium is the second lowest cost silver plan premium offered through the Marketplace where you reside that applies to your coverage family (described earlier). The SLCSP premium is not the same as your enrollment premium, unless you enroll in the applicable SLCSP. Form 1095-A, Part III, column B, generally reports the applicable SLCSP premium. If no APTC was paid for your coverage, Form 1095-A, Part III, column B, may be wrong or blank or may report your applicable SLCSP premium as -0-.
2016 Instructions for Form 8962, Premium Tax Credit (IRS)
Paying back advance credit, and the cap on it
If the advance credit (APTC) paid on your behalf during 2016 exceeds the Premium Tax Credit you are allowed based on your actual income for the year, the difference is excess APTC that you must repay when you file your return. However, if your household income is below 400% of the Federal poverty line, your repayment is capped at the amounts shown in Table 5 based on your filing status and income as a percentage of the poverty line. For 2016 the caps are: income below 200% of the poverty line - $300 if single, $600 otherwise; at least 200% but less than 300% - $750 if single, $1,500 otherwise; at least 300% but less than 400% - $1,275 if single, $2,550 otherwise. If your income is 400% or more of the poverty line there is no cap and you must repay all excess APTC. The repayment is the smaller of the excess amount or the Table 5 cap, and you enter it on Form 8962, line 29, which flows to your tax return. The applicable percentages ranging from the lowest of 2.03% to the highest of 9.66% of household income determine your actual credit and therefore how much of any advance payment is excess.
Table 5. Repayment Limitation IF the amount on Form 8962, line 5 is . . . THEN enter on line 28 . . . for a filing status of Single— for any other filing status— Less than 200 . . . . . . . . . . . . $300 $600 At least 200 but less than 300 . . . $750 $1,500 At least 300 but less than 400 . . . $1,275 $2,550 400 or 401 . . . . . . . . . . . . . . leave line 28 blank
2016 Instructions for Form 8962, Premium Tax Credit (IRS)
Filing separately usually disqualifies you
If you are considered married for federal income tax purposes at the end of 2016, you must generally file a joint return to take the Premium Tax Credit. If you file as married filing separately and you are not a victim of domestic abuse or spousal abandonment, you are not an applicable taxpayer and you cannot take the PTC at all. You generally must repay all of the advance credit (APTC) paid for a qualified health plan that covered only individuals in your tax family. If the policy also covered at least one individual in your spouse's tax family, you generally must repay half of the APTC paid for the policy. However, the amount you must repay may be limited. The applicable percentage used to figure your actual credit, from the lowest of 2.03% to the highest of 9.66% of household income, determines whether any advance payments are excess and therefore must be repaid. Two exceptions allow certain married persons living apart or victims of domestic abuse or spousal abandonment to file separately and still qualify for the credit if they meet specific requirements.
Married filing separately. If you file as married filing separately and are not a victim of domestic abuse or spousal abandonment (see Exception 2—Victim of domestic abuse or spousal abandonment under Married taxpayers above), then you are not an applicable taxpayer and you cannot take the PTC. You generally must repay all of the APTC paid for a qualified health plan that covered only individuals in your tax family. If the policy also covered at least one individual in your spouse’s tax family, you generally must repay half of the APTC paid for the policy.
2016 Instructions for Form 8962, Premium Tax Credit (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Rev. Proc. 2014-62 (IRS)
- Lowest applicable percentage
Initial percentage Final percentage Less than 133% 2.03% 2.03%
- Highest applicable percentage
At least 300% but not more than 400% 9.66% 9.66%