2021 Premium Tax Credit
For 2021, the Premium Tax Credit is 0% (Lowest applicable percentage) and 8.5% (Highest applicable percentage).
Effective 2021-01-01Source: Rev. Proc. 2021-23 (IRS)Verified 2026-08-29
Compared with 2020
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Lowest applicable percentage | 2.06% | 0% | -2.06% (-100.0%) |
| Highest applicable percentage | 9.78% | 8.5% | -1.28% (-13.1%) |
Who it applies to
Taxpayers who purchased health insurance through the Health Insurance Marketplace and whose household income falls within the range eligible for the Premium Tax Credit under IRC § 36B, for taxable years beginning in 2021.
What changed this year, and why
The applicable percentage table used to calculate the Premium Tax Credit was temporarily modified by the American Rescue Plan Act of 2021 for taxable years beginning in 2021. The lowest applicable percentage dropped to 0% and the highest applicable percentage was set at 8.5%, compared with 2.06% and 9.78% respectively in 2020.
Common questions
- What is the applicable percentage used for?
- The applicable percentage determines how much of a taxpayer's household income, expressed as a share of the federal poverty line, the taxpayer is expected to contribute toward a benchmark health plan. The difference between that contribution and the cost of the benchmark plan is the Premium Tax Credit amount.
- How did the 2021 percentages compare with 2020?
- In 2020 the lowest applicable percentage was 2.06% and the highest was 9.78%. For 2021 the lowest was reduced to 0% and the highest was reduced to 8.5%, meaning taxpayers at every income level within the table were asked to contribute a smaller share of income toward coverage.
Who counts as an applicable taxpayer
You are an applicable taxpayer for 2021 if your household income is at least 100% of the federal poverty line for your family size, or if you (or your spouse, if filing jointly) received or were approved to receive unemployment compensation for any week beginning in 2021. If you are married, you generally must file a joint return unless you qualify for one of two exceptions: certain married persons living apart, or victims of domestic abuse or spousal abandonment. You cannot take the credit if someone else can claim you as a dependent. You must also not be unlawfully present in the United States to claim the credit for your own coverage. If any of these conditions apply, you must file Form 8962 with your tax return to claim the Premium Tax Credit or to reconcile any advance payments made on your behalf.
Applicable taxpayer. You must be an applicable taxpayer to take the PTC. Generally, you are an applicable taxpayer for 2021 if (1) your household income for 2021 (described earlier) is at least 100% of the federal poverty line for your family size (provided in Tables 1-1, 1-2, and 1-3), or (2) you, or your spouse (if filing a joint return), received, or were approved to receive, unemployment compensation for any week beginning during 2021.
2021 Instructions for Form 8962, Premium Tax Credit (IRS)
Household income is not the same as your AGI
For the Premium Tax Credit, household income is not the same as your adjusted gross income. Instead, it is calculated as the modified adjusted gross income of you and your spouse (if filing jointly), plus the modified adjusted gross income of each dependent you claim who must file a tax return because their income meets the filing threshold. However, it excludes the modified adjusted gross income of dependents who file a return only to claim a refund of withheld or estimated tax. This broader measure of income determines whether you qualify for the credit and how much you can receive. The applicable percentage used to calculate your credit ranges from 0% for lower-income taxpayers to 8.5% for those at higher income levels, which directly affects the amount of premium assistance you receive.
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 2021 return only to claim a refund of withheld income tax or estimated tax.
2021 Instructions for Form 8962, Premium Tax Credit (IRS)
The second lowest cost silver plan sets the credit
The Premium Tax Credit is calculated based on the second lowest cost silver plan available in your area, not the plan you actually enrolled in. This benchmark premium applies to your coverage family as defined by the IRS. Unless you happen to enroll in that exact plan, the benchmark premium will differ from your actual enrollment premium. Form 1095-A, Part III, column B, generally reports this applicable second lowest cost silver plan premium. The credit amount is determined by comparing the cost of this benchmark plan to the amount you are expected to pay based on your household income, using an applicable percentage that ranges from 0% to 8.5%. If no advance payments were made for your coverage, the amount shown on Form 1095-A may be incorrect or blank.
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.
2021 Instructions for Form 8962, Premium Tax Credit (IRS)
Paying back advance credit, and the cap on it
When advance payments of the Premium Tax Credit exceed the credit amount you're actually entitled to, you generally must repay the excess. However, the repayment may be limited to specific amounts shown in Table 5, which caps your repayment obligation based on your household income relative to the federal poverty line. If you were married at the end of 2021 but filed separately, these repayment limitations apply to you and your spouse separately based on each person's household income. Certain situations remove the cap entirely, requiring full repayment of all excess advance payments. You report the limited amount on line 28 of Form 8962, or if the cap doesn't apply, you report the full excess on line 29.
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. If you were married at the end of 2021 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.
2021 Instructions for Form 8962, Premium Tax Credit (IRS)
Filing separately usually disqualifies you
If you are married but file as married filing separately, you generally cannot claim the Premium Tax Credit and are not considered an applicable taxpayer. You must typically repay all advance payments made for coverage of individuals in your tax family. If the policy also covered at least one person in your spouse's tax family, you must generally repay half of the advance payments. However, two exceptions allow you to file separately and still qualify: if you are a victim of domestic abuse or spousal abandonment, or if you meet the requirements for certain married persons living apart and can file as head of household. The repayment amount may still be subject to the limitation based on household income.
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 must generally 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 must generally repay half of the APTC paid for the policy.
2021 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. 2021-23 (IRS)
- Lowest applicable percentage
Initial percentage Final percentage poverty line: Less than 150% 0.00% 0.00%
- Highest applicable percentage
At least 400% and higher 8.50% 8.50%