2018 Premium Tax Credit
For 2018, the Premium Tax Credit figures are 2.01% (Lowest applicable percentage) and 9.56% (Highest applicable percentage).
Effective 2018-01-01Source: Rev. Proc. 2017-36 (IRS)Verified 2026-09-02
Compared with 2017
| Item | 2017 | 2018 | Change |
|---|---|---|---|
| Lowest applicable percentage | 2.04% | 2.01% | -0.03% (-1.5%) |
| Highest applicable percentage | 9.69% | 9.56% | -0.13% (-1.3%) |
Who it applies to
The table is used by anyone claiming the premium tax credit for a taxable year beginning in 2018. Household income measured against the Federal poverty line selects the band, and the band's applicable percentage is the share of household income the taxpayer is expected to put towards the benchmark plan. That share is 2.01% at the bottom of the schedule and 9.56% in the highest band the table covers. The credit is the remainder of the benchmark premium.
What changed this year, and why
Rev. Proc. 2017-36 indexes the applicable percentage table under § 36B for taxable years beginning in 2018, and both ends of the schedule fell. The lowest band went from 2.04% to 2.01%, and the highest band the table covers went from 9.69% to 9.56%. Indexing follows the rates of premium growth relative to the rates of income growth, so the table can move down as well as up.
Common questions
- What is the premium tax credit applicable percentage for 2018?
- For taxable years beginning in 2018 the applicable percentage table under § 36B runs from 2.01% in the lowest household income band to 9.56% in the highest band the table covers.
- Why did the applicable percentages fall for 2018?
- The table is indexed to the rate of premium growth relative to the rate of income growth. When income growth keeps pace, the expected contribution share can fall, and for 2018 it did at both ends of the schedule: from 2.04% to 2.01% at the bottom and from 9.69% to 9.56% at the top.
- Does a lower applicable percentage mean a larger credit?
- Yes, for the same benchmark premium and the same household income. The applicable percentage fixes the expected contribution and the credit covers what the benchmark premium costs beyond it, so a smaller expected contribution leaves a larger credit.
- Where is the 2018 table published?
- In Rev. Proc. 2017-36, issued by the IRS, which provides the applicable percentage table for taxable years beginning in 2018 for the purposes of § 36B.
Who counts as an applicable taxpayer
To claim the Premium Tax Credit, you must meet specific requirements as an applicable taxpayer. Your household income must fall between 100% and 400% of the federal poverty line for your family size, though certain exceptions exist for those below 100%. Additionally, no one can claim you as a dependent on their 2018 tax return. If you were married at the end of 2018, you generally must file a joint return with your spouse, though exceptions apply for victims of domestic abuse or spousal abandonment. You must also have enrolled at least one member of your tax family in a qualified health plan through the Marketplace for at least one month of the year, and that individual cannot have been eligible for other minimum essential coverage. Finally, you are not entitled to the credit for any period during which an individual in your tax family was not lawfully present in the United States.
To be an applicable taxpayer, you must meet all of the following requirements. a. Your household income for 2018 is at least 100% but no more than 400% of the federal poverty line for your family size (see the instructions for Line 4, later). However, having household income below 100% of the federal poverty line will not disqualify you from taking the PTC if you meet certain requirements described under Household income below 100% of the federal poverty line, later. b. No one can claim you as a dependent on a tax return for 2018. c. If you were married at the end of 2018, generally you must file a joint return. However, filing a separate return from your spouse will not disqualify you from being an applicable taxpayer if you meet certain requirements described under Married taxpayers, later.
2018 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 the same as your adjusted gross income (AGI). It is calculated as the modified adjusted gross income (modified AGI) of you and your spouse if filing a joint return, plus the modified AGI of each individual whom you claim as a dependent and who is required to file an income tax return because their income meets the filing threshold. Modified AGI includes your AGI plus certain income that is not subject to tax, such as foreign earned income, tax-exempt interest, and the portion of social security benefits that is not taxable. Importantly, household income does not include the modified AGI of dependents who are filing a return only to claim a refund of withheld income tax or estimated tax. This broader definition means that even if your AGI appears low, your household income for PTC purposes may be higher once these additional income sources and dependent incomes are included.
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).
2018 Instructions for Form 8962, Premium Tax Credit (IRS)
The second lowest cost silver plan sets the credit
The Premium Tax Credit is calculated using the second lowest cost silver plan (SLCSP) premium offered through the Marketplace where you reside that applies to your coverage family. The applicable SLCSP premium is not the same as your enrollment premium unless you actually enroll in that specific plan. Form 1095-A, Part III, column B, generally reports the applicable SLCSP premium. However, if no advance premium tax credit (APTC) was paid for your coverage, this amount may be wrong, blank, or show as zero. Additionally, if you had a change in circumstances during 2018 that you did not report to the Marketplace, the SLCSP premium reported on your form may be incorrect. In these cases, you must determine your correct applicable SLCSP premium yourself. You do not have to request a corrected Form 1095-A from the Marketplace. Your monthly contribution amount is based on this SLCSP premium, not on the actual premiums you paid out of pocket during the year.
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).
2018 Instructions for Form 8962, Premium Tax Credit (IRS)
Paying back advance credit, and the cap on it
When advance premium tax credit (APTC) was paid on your behalf and your actual credit amount is less than the APTC, you must repay the difference. However, the repayment amount may be limited based on your household income as a percentage of the federal poverty line. The excess APTC you must repay may be limited to the amounts in Table 5 of the instructions. Enter the appropriate amount from Table 5 on line 28 of Form 8962. If you were married at the end of 2018 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. The applicable percentage used to calculate your monthly contribution amount ranges from the lowest applicable percentage of 2.01% to the highest applicable percentage of 9.56% of your household income.
The excess APTC you must repay may be limited to the amounts in Table 5. Enter the appropriate amount from Table 5 on line 28.
2018 Instructions for Form 8962, Premium Tax Credit (IRS)
Filing separately usually disqualifies you
If you are considered married for federal income tax purposes, you must file a joint return with your spouse to take the Premium Tax Credit unless one of the two exceptions applies to you. You are not considered married if you are divorced or legally separated according to your state law under a decree of divorce or separate maintenance. If you are considered married, you may be eligible to take the PTC without filing a joint return if you are a victim of domestic abuse or spousal abandonment. If you file as married filing separately and are not a victim of domestic abuse or spousal abandonment, then you are not an applicable taxpayer and you cannot take the PTC. You generally must repay all of the advance premium tax 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.
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.
2018 Instructions for Form 8962, Premium Tax Credit (IRS)
A change in income or family should be reported right away, not held for tax time
Taxpayers who receive advance premium tax credit payments must notify the Marketplace promptly when their household income, address, family size, or other coverage circumstances change during the year. Waiting until the tax return is filed can result in a large reconciliation difference: if income rises or family size shrinks after enrollment, the advance payments may exceed the final credit and the excess must be repaid; if income falls or family size grows, the taxpayer may be owed additional credit. Reporting early lets the Marketplace raise or lower the monthly advance amount to match the credit the taxpayer is actually expected to claim, reducing the chance of an unexpected balance due or a delayed refund when Form 8962 is filed.
Report changes in circumstances when you re-enroll in coverage and during the year. If APTC is being paid 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.
2018 Instructions for Form 8962, Premium Tax Credit (IRS)
APTC forces a return even when your income wouldn't otherwise require one
Taxpayers who received advance credit payments must file a federal income tax return and attach Form 8962 to reconcile the credit, even when their income is too low to otherwise require a return. The filing requirement is triggered by any advance payment of the premium tax credit being made on the taxpayer's behalf during the year. The return must be filed on Form 1040 or Form 1040NR; Form 1040NR-EZ, Form 1040-SS, and Form 1040-PR are not accepted when Form 8962 is attached. Reconciliation compares the advance payments the Marketplace sent to insurers with the credit the taxpayer is actually entitled to based on household income for the year. For 2018 the applicable percentages used to compute the credit run from 2.01% to 9.56% of household income, and the result of the reconciliation determines whether the taxpayer receives an additional credit or must repay some or all of the advance amounts.
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. You must use Form 1040 or Form 1040NR.
2018 Instructions for Form 8962, Premium Tax Credit (IRS)
An affordable QSEHRA from your employer can wipe out the credit for that month
A taxpayer who is offered a qualified small employer health reimbursement arrangement by an employer may be barred from claiming the premium tax credit for months when the arrangement is considered affordable. The employer reports the annual permitted benefit on the employee's Form W-2. When 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 the monthly credit must be reduced, though not below zero, by the monthly permitted benefit amount, and the word "QSEHRA" must be written in the top margin of page 1 of Form 8962 to explain the entry and avoid processing delays. For 2018 the applicable percentages used to figure what counts as affordable run from 2.01% to 9.56% of household income.
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.
2018 Instructions for Form 8962, Premium Tax Credit (IRS)
A wrong benchmark premium on your Form 1095-A does not excuse using it
When preparing Form 8962, a taxpayer cannot simply copy the second-lowest-cost silver plan premium from Form 1095-A if there is reason to believe the Marketplace reported an incorrect amount. The instructions direct the taxpayer to determine the correct applicable second-lowest-cost silver plan premium for the affected months in that situation. Information for making that determination is available in Publication 974, and taxpayers who enrolled through the federally facilitated Marketplace can use the tax tool at HealthCare.gov. If the correct premium differs from month to month, the taxpayer checks the "No" box on the form and continues with the monthly calculation on lines 12 through 23. For 2018 the applicable percentages that factor into the credit range from 2.01% to 9.56% of household income, so using the wrong benchmark premium can produce a materially incorrect credit figure on the return.
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. See Pub. 974 for information on determining the correct applicable SLCSP premium or, if you enrolled through the federally facilitated Marketplace, go to HealthCare.gov/Tax-Tool/. If your correct applicable SLCSP premium is not the same for all 12 months, check the “No” box and continue to lines 12–23.
2018 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. 2017-36 (IRS)
- Lowest applicable percentage
Initial percentage Final percentage Less than 133% 2.01% 2.01%
- Highest applicable percentage
At least 300% but not more than 400% 9.56% 9.56%