2017 Premium Tax Credit
For 2017, the Premium Tax Credit figures are 2.04% (Lowest applicable percentage) and 9.69% (Highest applicable percentage).
Effective 2017-01-01Source: Rev. Proc. 2016-24 (IRS)Verified 2026-09-02
Compared with 2016
| Item | 2016 | 2017 | Change |
|---|---|---|---|
| Lowest applicable percentage | 2.03% | 2.04% | +0.01% (+0.5%) |
| Highest applicable percentage | 9.66% | 9.69% | +0.03% (+0.3%) |
Who it applies to
Anyone claiming the premium tax credit for a taxable year beginning in 2017 uses this table. Household income as a share of the Federal poverty line picks the band; the applicable percentage for that band is the share of household income the taxpayer is expected to pay towards the benchmark plan, and the credit makes up the rest. That expected share is 2.04% at the bottom of the schedule and 9.69% in the highest band the table covers. It is not the required contribution percentage, which the same revenue procedure states separately and which is about employer-sponsored coverage.
What changed this year, and why
Rev. Proc. 2016-24 indexes the applicable percentage table under § 36B for taxable years beginning in 2017. The lowest band moved from 2.03% to 2.04%, and the highest band the table covers moved from 9.66% to 9.69%. The shape of the table is unchanged: the same income bands, each with an initial and a final percentage, and those two equal only at the bottom of the schedule and in the top band.
Common questions
- What is the premium tax credit applicable percentage for 2017?
- For taxable years beginning in 2017 the applicable percentage table under § 36B runs from 2.04% in the lowest household income band to 9.69% in the highest band the table covers. Every band in between carries an initial and a final percentage.
- How did the applicable percentage table change from 2016 to 2017?
- Both ends of the schedule rose slightly. The lowest band went from 2.03% to 2.04% and the highest band the table covers went from 9.66% to 9.69%. The band boundaries themselves did not change.
- Does a higher applicable percentage mean a smaller credit?
- Yes. The applicable percentage is the share of household income a taxpayer is expected to contribute towards the benchmark plan, and the credit is what is left of the benchmark premium after that contribution. Raising the percentage raises the expected contribution and lowers the credit for the same premium.
- Where is the 2017 table published?
- In Rev. Proc. 2016-24, issued by the IRS. It provides the applicable percentage table for taxable years beginning in 2017 for the purposes of § 36B and indexes it using the methodology described in Rev. Proc. 2014-37.
Who counts as an applicable taxpayer
You must file Form 8962 with your 2017 income tax return if any of three conditions apply: you are claiming the Premium Tax Credit, advance credit payments were made for you or someone in your tax family, or advance payments were made for an individual you told the Marketplace you would claim as a dependent but no one actually claims. Even if your income is too low to normally require filing, you must submit a return and attach Form 8962. You cannot use Form 1040EZ or the simplified nonresident forms. If someone else enrolled a member of your tax family and received advance payments for that person, you still must file to reconcile those payments.
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 for that individual.
2017 Instructions for Form 8962, Premium Tax Credit (IRS)
Household income is not the same as your AGI
Household income for the Premium Tax Credit is not simply your adjusted gross income. It equals the modified adjusted gross income of you and your spouse if filing jointly, plus the modified adjusted gross income of each dependent who must file a return because their income exceeds the filing threshold. Modified adjusted gross income starts with the adjusted gross income shown on your return and adds back certain untaxed amounts: foreign earned income, tax-exempt interest, and the nontaxable portion of social security benefits. Dependents who file only to claim a refund of withheld or estimated tax are excluded from household income. This broader measure determines whether your income falls between the lowest applicable percentage and the highest applicable percentage of the federal poverty line and sets the rate used to calculate your credit.
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).
2017 Instructions for Form 8962, Premium Tax Credit (IRS)
The second lowest cost silver plan sets the credit
The applicable second lowest cost silver plan premium is the premium for the second lowest cost silver plan offered through the Marketplace in your area that covers your coverage family. This amount, not your actual enrollment premium, determines the benchmark used to calculate your Premium Tax Credit. Form 1095-A, Part III, column B, generally reports this figure, but it may be wrong or blank if no advance credit was paid or if you had unreported changes in circumstances during the year. Your monthly credit equals the difference between the applicable second lowest cost silver plan premium and your monthly contribution amount, which is the portion of household income you would pay toward premiums at the applicable percentage rate ranging from the lowest applicable percentage to the highest applicable percentage of income.
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).
2017 Instructions for Form 8962, Premium Tax Credit (IRS)
Paying back advance credit, and the cap on it
If advance credit payments exceed the credit you are entitled to based on your actual income, you must repay the excess. The repayment amount may be limited by Table 5 caps based on your household income as a percentage of the federal poverty line. For taxpayers filing separately who were married at year end, the repayment limitations apply to each spouse separately based on the household income shown on each return. However, if your household income exceeds certain levels above the federal poverty line, the cap does not apply and you must repay all excess advance payments. Certain situations involving the Health Coverage Tax Credit also remove the limitation. The capped repayment amounts protect lower-income taxpayers from owing the full difference when their income was estimated incorrectly at enrollment.
The excess APTC you must repay may be limited to the amounts in Table 5 next. Enter the appropriate amount from Table 5 on line 28. If you were married at the end of 2017 but are filing separately from your spouse, the repayment limitations shown in Table 5 apply to you and your spouse separately based on the household income reported on each return.
2017 Instructions for Form 8962, Premium Tax Credit (IRS)
Filing separately usually disqualifies you
If you were considered married for federal income tax purposes at the end of 2017, you generally must file a joint return with your spouse to qualify as an applicable taxpayer and claim the Premium Tax Credit. Filing as married filing separately disqualifies you unless you meet specific exceptions. One exception allows married persons living apart to file as head of household or single if they meet requirements for married persons who live apart. Another exception permits victims of domestic abuse or spousal abandonment to file separately and still claim the credit, provided they are living apart from their spouse, cannot file jointly due to the abuse or abandonment, certify this on Form 8962, and have not used this exception for three consecutive prior years. If you file separately without meeting either exception, you are not an applicable taxpayer and cannot take the credit.
Married taxpayers. If you are considered married for federal income tax purposes, you must file a joint return with your spouse to take the PTC unless one of the two exceptions below applies to you.
2017 Instructions for Form 8962, Premium Tax Credit (IRS)
A change in income or family should be reported right away, not held for tax time
Under the 2017 Premium Tax Credit rules, taxpayers who received Advance Premium Tax Credit (APTC) payments during the year must report life changes to the Health Insurance Marketplace as soon as they happen - not wait until they prepare their tax return. Changes that must be reported promptly include shifts in household income, changes in family size (such as a marriage, birth, adoption, or divorce), a change in address, or the loss or gain of other health coverage. Reporting these changes right away allows the Marketplace to adjust the amount of APTC paid on the taxpayer's behalf so that it more closely matches the credit the taxpayer will actually be entitled to when filing the return. Failing to update the Marketplace can result in receiving too much or too little advance credit: too much advance credit reduces the refund or creates a balance due at tax time, while too little means the taxpayer missed out on lower monthly premiums. The applicable-percentage range used to calculate the credit in 2017 runs from 2.04% to 9.69% of household income, and income changes can move a household within that range.
Report changes in circumstances when you re-enroll in coverage and during the year. If APTC is being paid in 2018 for an individual in your tax family (described later) and you have had certain changes in circumstances (see the examples below), it is important that you report them to the Marketplace where you enrolled in coverage. Reporting changes in circumstances promptly will allow the Marketplace to adjust your APTC to refl
2017 Instructions for Form 8962, Premium Tax Credit (IRS)
APTC forces a return even when your income wouldn't otherwise require one
Under the 2017 Premium Tax Credit rules, any taxpayer who is taking the PTC, or for whom APTC was paid during the year, must file a federal income tax return and attach Form 8962 even if their income is so low that they would not normally be required to file a return at all. This filing obligation applies regardless of how little the taxpayer earned. Without filing Form 8962, the IRS cannot reconcile the advance payments the Marketplace sent on the taxpayer's behalf against the credit the taxpayer actually qualifies for based on final household income. The reconciliation compares the APTC paid during the year to the credit computed using the 2017 applicable percentages, which run from a lowest rate of 2.04% to a highest rate of 9.69% of household income. If the advance payments exceeded the computed credit, the excess generally must be repaid; if they fell short, the difference is refunded. Taxpayers must use Form 1040, Form 1040A, or Form 1040NR; they cannot use the simpler 1040EZ or other short forms when Form 8962 is attached.
If any of the circumstances above apply to you, you must file an income tax return and attach Form 8962 even if you are not otherwise required to file.
2017 Instructions for Form 8962, Premium Tax Credit (IRS)
An affordable QSEHRA from your employer can wipe out the credit for that month
Under the 2017 Premium Tax Credit rules, a taxpayer who is covered by a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) must reduce - and may eliminate entirely - the Premium Tax Credit for any month in which the QSEHRA is considered affordable. A QSEHRA is an employer-funded arrangement that reimburses eligible employees of small businesses for medical expenses, including Marketplace health-insurance premiums. If the QSEHRA is affordable for a given month, no Premium Tax Credit is allowed for that month at all. If the arrangement is unaffordable for a month, the taxpayer may still claim a credit, but must reduce the monthly credit amount (though not below zero) by the monthly permitted benefit under the QSEHRA, and must write "QSEHRA" in the top margin of page 1 of Form 8962. The 2017 applicable-percentage range of 2.04% to 9.69% of household income is used to compute any remaining credit after the reduction.
If the QSEHRA is affordable for a month, no PTC is allowed for the month. If the QSEHRA is unaffordable for a month, you must reduce the monthly PTC (but not below -0-) by the monthly permitted benefit amount and you must write “QSEHRA” in the top margin on page 1 of Form 8962 to explain your entry and avoid delay in the processing of your return.
2017 Instructions for Form 8962, Premium Tax Credit (IRS)
A wrong benchmark premium on your Form 1095-A does not excuse using it
For 2017, taxpayers who receive a Form 1095-A from the Health Insurance Marketplace cannot simply copy the second-lowest-cost Silver Plan (SLCSP) premium shown on the form if they have reason to believe the Marketplace reported an incorrect amount. Instead, the taxpayer is required to determine the correct applicable SLCSP premium for the affected months themselves. Situations that can trigger this obligation include a change in address during the year, the Marketplace being told the taxpayer would claim a personal exemption for someone but the taxpayer is not doing so, or the death of an enrolled individual. The taxpayer must use IRS Publication 974 or, for those enrolled through the federally facilitated Marketplace, the tool at HealthCare.gov/Tax-Tool to look up the right premium amounts. Using a known-incorrect SLCSP figure on Form 8962 would distort the Premium Tax Credit calculation, which for 2017 applies percentages ranging from a lowest applicable percentage of 2.04% to a highest applicable percentage of 9.69% of household income.
If any of the above apply and you did not notify the Marketplace or if you have reason to believe the Marketplace reported the wrong applicable SLCSP premium, determine the correct applicable SLCSP premium for the months affected.
2017 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. 2016-24 (IRS)
- Lowest applicable percentage
Initial percentage Final percentage Less than 133% 2.04% 2.04%
- Highest applicable percentage
At least 300% but not more than 400% 9.69% 9.69%