2020 Premium Tax Credit
For 2020, the Premium Tax Credit figures are 2.06% (Lowest applicable percentage) and 9.78% (Highest applicable percentage).
Effective 2020-01-01Source: Rev. Proc. 2019-29 (IRS)Verified 2026-09-02
Compared with 2019
| Item | 2019 | 2020 | Change |
|---|---|---|---|
| Lowest applicable percentage | 2.08% | 2.06% | -0.02% (-1.0%) |
| Highest applicable percentage | 9.86% | 9.78% | -0.08% (-0.8%) |
Who it applies to
The table applies to anyone claiming the premium tax credit for a taxable year beginning in 2020. Household income as a share of the Federal poverty line decides the band; 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 remainder of that premium. The expected share is 2.06% at the bottom of the schedule and 9.78% in the highest band the table covers.
What changed this year, and why
Rev. Proc. 2019-29 indexes the applicable percentage table under § 36B for taxable years beginning in 2020. Both ends of the schedule eased back: the lowest band from 2.08% to 2.06% and the highest band the table covers from 9.86% to 9.78%. The indexing uses the methodology in Rev. Proc. 2014-37 together with the Department of Health and Human Services notice of benefit and payment parameters for the year.
Common questions
- What is the premium tax credit applicable percentage for 2020?
- For taxable years beginning in 2020 the applicable percentage table under § 36B runs from 2.06% in the lowest household income band to 9.78% in the highest band the table covers.
- How did the table change from 2019 to 2020?
- It fell slightly at both ends, from 2.08% to 2.06% at the bottom of the schedule and from 9.86% to 9.78% in the highest band the table covers.
- Is this the same as the affordability percentage for employer coverage?
- No. The applicable percentage table sizes the premium tax credit itself. The required contribution percentage, which the same revenue procedure states separately, decides only whether an offer of employer-sponsored coverage counts as affordable.
- Where is the 2020 table published?
- In Rev. Proc. 2019-29, issued by the IRS, which provides the applicable percentage table for taxable years beginning in 2020 for the purposes of § 36B.
Who counts as an applicable taxpayer
For 2020, the IRS defines an "applicable taxpayer" as someone who meets all of the following requirements. First, household income must fall between 100% and 400% of the federal poverty line for the taxpayer's family size, though there are exceptions for those below 100% under certain circumstances. Second, no one else can claim the taxpayer as a dependent on their 2020 tax return. Third, if the taxpayer was married at year-end, they generally must file a joint return, though exceptions exist for filing separately under specific conditions. Additionally, an individual is not entitled to the Premium Tax Credit for any period during which they are not lawfully present in the United States. Those covered under an individual coverage HRA for 2020 are also ineligible for the credit. Applicable taxpayers must also have had at least one month where a family member was enrolled in a Marketplace qualified health plan, was not eligible for other minimum essential coverage (except individual market coverage), and paid their share of enrollment premiums by the tax return due date.
To be an applicable taxpayer, you must meet all of the following requirements. a. Your household income for 2020 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 2020. c. If you were married at the end of 2020, 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.
2020 Instructions for Form 8962, Premium Tax Credit (IRS)
Household income is not the same as your AGI
For Premium Tax Credit purposes, household income is defined more broadly than the adjusted gross income on your tax return. It is the modified adjusted gross income of you and your spouse, if you file a joint return, plus the modified adjusted gross income of each dependent you claim who must file a return because his or her income meets the filing threshold. Modified adjusted gross income means the adjusted gross income shown on your return plus certain amounts not subject to tax, such as foreign earned income, tax-exempt interest, and the non-taxable portion of social security benefits. Household income does not include the modified adjusted gross income of dependents who file a return only to claim a refund of withheld or estimated tax. This broader measure determines whether your income falls within the range that qualifies for the credit and, if so, which applicable percentage between the lowest of 2.06% and the highest of 9.78% is used to figure your monthly contribution toward premiums.
Household income does not include the modified AGI of those individuals whom you claim as dependents and who are filing a 2020 return only to claim a refund of withheld income tax or estimated tax.
2020 Instructions for Form 8962, Premium Tax Credit (IRS)
The second lowest cost silver plan sets the credit
The benchmark plan used to figure your Premium Tax Credit is the second lowest cost silver plan available through the Marketplace in the rating area where you live. This is the plan whose premium sets the ceiling for calculating your monthly credit amount; it is not necessarily the plan you actually enrolled in. The applicable second lowest cost silver plan premium is determined for your coverage family, which includes all members of your tax family enrolled in a qualified health plan. You will generally find this amount reported on Form 1095-A, Part III, column B, but that figure can be wrong or blank if no advance credit was paid or if you had a change in circumstances you did not report to the Marketplace during the year. In those cases you must determine the correct applicable premium yourself rather than relying on the form as printed.
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).
2020 Instructions for Form 8962, Premium Tax Credit (IRS)
Paying back advance credit, and the cap on it
If the advance credit payments you received during the year exceed the credit you are actually entitled to based on your income, you generally must repay the difference. However, the law caps that repayment at fixed amounts that depend on your household income as a percentage of the federal poverty line. Taxpayers with lower incomes face smaller caps, and the cap rises as income rises within the qualifying range. For 2020 the applicable percentages used in the credit formula range from a lowest of 2.06% to a highest of 9.78%, and those percentages determine what portion of income you are expected to contribute toward premiums before the credit fills the gap to the benchmark plan. If your income exceeds the top of the qualifying range, there is no cap and you must repay all excess advance payments.
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.
2020 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 PTC unless one of the two exceptions below applies to you. The first exception covers certain married persons who live apart and qualify to file as head of household or as single on a nonresident return. The second exception covers victims of domestic abuse or spousal abandonment who are living apart from their spouse at the time they file; they may use the married filing separately status and still claim the credit. If neither exception applies and you file as married filing separately, you are not an applicable taxpayer and you cannot take the credit at all. You must also generally repay all of the advance credit paid for coverage of individuals in your tax family, or half of the advance credit if the policy also covered at least one individual in your spouse's tax family.
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.
2020 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 2020 Premium Tax Credit, if advance payments of the premium tax credit (APTC) are being paid for someone in your tax family and you experience certain life changes during the year, the IRS requires that you report those changes to the Marketplace promptly rather than waiting until you file your tax return. Reportable changes include changes in household income, a move, gaining or losing other health coverage, employment changes, a birth or adoption, marriage or divorce, and other changes to the composition of your tax family. Reporting these changes lets the Marketplace adjust your APTC so it aligns with the credit you are estimated to claim on your return, helping you avoid owing tax when you file. You report the change to the Marketplace where you enrolled in coverage.
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. Reporting changes in circumstances promptly will allow the Marketplace to adjust your APTC to reflect the PTC you are estimated to be able to take on your tax return. Adjusting your APTC when you re-enroll in coverage and during the year can help you avoid owing tax when you file your tax return. Changes that you should report to the Marketplace include the following. • Changes in household income. • Moving to a different address. • Gaining or losing eligibility for other health care coverage. • Gaining, losing, or other changes to employment. • Birth or adoption. • Marriage or divorce. • Other changes affecting the composition of your tax family.
2020 Instructions for Form 8962, Premium Tax Credit (IRS)
APTC forces a return even when your income wouldn't otherwise require one
For the 2020 Premium Tax Credit, if advance payments of the credit (APTC) were paid for you or another individual in your tax family, or if APTC was paid for an individual you told the Marketplace would be in your tax family but nobody included that person on any return, the IRS requires you to file an income tax return and attach the reconciliation form even if your income would not normally require you to file. This filing obligation exists solely because APTC was paid on your behalf during the year and must be reconciled. If someone else enrolled an individual in your tax family and APTC was paid for that coverage, you must still file to reconcile the advance payments. In short, receiving APTC during the year creates a filing requirement for the tax year regardless of how low your income may be.
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.
2020 Instructions for Form 8962, Premium Tax Credit (IRS)
An affordable QSEHRA from your employer can wipe out the credit for that month
For the 2020 Premium Tax Credit, if you were covered under a qualified small employer health reimbursement arrangement (QSEHRA) during the year, the affordability of that arrangement determines whether you can claim the credit. An eligible small employer can reimburse employees for medical expenses, including Marketplace premiums, and reports the annual permitted benefit on your Form W-2. If the QSEHRA is considered affordable for any given month, no premium tax credit is allowed for that month at all - the credit is entirely eliminated for that period. If the QSEHRA is unaffordable for a month, you may still claim the credit but must reduce the monthly credit amount by the monthly permitted benefit amount under the arrangement. Affordability is determined month by month, so the arrangement can wipe out the credit in some months while allowing a reduced credit in others.
If you were covered under a QSEHRA, your employer should have reported the annual permitted benefit in box 12 of your Form W-2 with code FF. If the QSEHRA is affordable for a month, no PTC is allowed for the month.
2020 Instructions for Form 8962, Premium Tax Credit (IRS)
A wrong benchmark premium on your Form 1095-A does not excuse using it
For the 2020 Premium Tax Credit, the second-lowest cost silver plan (SLCSP) premium is used to calculate the credit amount. If you receive a Form 1095-A from the Marketplace and you have reason to believe it reports the wrong applicable SLCSP premium - for example, because you moved during the year, a family member died, or your household composition changed and you did not notify the Marketplace - you cannot simply use the incorrect figure from the form. You must determine the correct applicable SLCSP premium for the months affected and use that amount on your return. Information for determining the correct premium is available in Publication 974 or, if you enrolled through the federally facilitated Marketplace, through the tax tool on HealthCare.gov. If the correct premium differs from month to month, you must compute the credit separately for each month rather than using a single annual figure.
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.
2020 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. 2019-29 (IRS)
- Lowest applicable percentage
Initial percentage Final percentage Less than 133% 2.06% 2.06%
- Highest applicable percentage
At least 300% but not more than 400% 9.78% 9.78%