What Happens If You Go $1 Over the Subsidy Cliff?
Short answer: you lose the whole tax credit, not part of it. For 2027 coverage the credit stops at 400% of the poverty line, $63,840 for one person and $132,000 for a family of four; one dollar over and the household pays the plan’s full price for the year. If you had advance credits paid during a year that ends over the line, you repay them when you file. The ways back under are pre-tax retirement and HSA contributions and, for the self-employed, deductible business expenses. If you stay over and are healthy, compare a medically underwritten private plan, which does not depend on income.
Close to the line, or just over it?
Send your ZIP code. A licensed agent works out which side of the cliff your household lands on for 2027, and what the plans in your county cost either way.
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Is the ACA subsidy cliff back for 2027?
Yes. The enhanced credits that removed it expired at the end of 2025, so for 2026 and 2027 coverage the premium tax credit ends at 400% of the poverty line. For 2027 coverage that is $63,840 for one person and $132,000 for a family of four.
How do I get back under the subsidy cliff?
Lower your modified adjusted gross income: contribute to a traditional 401(k) or IRA or an HSA, and if you are self-employed, count every deductible business expense. A dollar under the line keeps the full credit.
$63,840 for one person. $86,560 for a couple. $132,000 for a family of four. Cross those figures by a dollar in 2026 and your premium tax credit does not shrink — it ends.
What the Number Is
Those are 400% of the federal poverty level for the 2026 plan year, calculated from the 2025 HHS poverty guidelines. Each additional household member adds $5,680 to the threshold.
What happens if I go one dollar over 400% of the poverty level? You lose the entire premium tax credit, not a portion of it. Below the line your contribution is capped at 10.22% of income for 2027. One dollar above it, the cap disappears and you pay the full filed premium. This is why it is called a cliff rather than a phase-out, and why income just above the threshold is the worst place to be.
Which Income Counts
What income counts toward the ACA subsidy cliff? Modified adjusted gross income, which is your adjusted gross income plus any tax-exempt interest, the non-taxable half of Social Security benefits, and excluded foreign earned income. It is a household figure covering everyone on your tax return, not just the person buying the plan. It is not your gross salary and not your take-home pay.
The practical consequence is that the figure is more movable than a salary. Deductions that reduce adjusted gross income reduce it too.
The Part That Catches Out 1099 Income
Do I have to pay back a subsidy if my income turns out higher? Yes, and above 400% of poverty there is no limit on how much. Below that line the amount you must repay is capped on a sliding scale. Above it, the entire advance credit you received during the year becomes repayable at tax time. For anyone with variable income, a strong fourth quarter can therefore cost more than it earned.
This is the single most expensive surprise in the individual market for contractors, commission-paid households and anyone whose December is unpredictable. You estimate your income in November for a year that has not happened yet, and the reconciliation arrives in April.
If your income moves during the year, update the estimate on your exchange account rather than leaving it and hoping. The credit is recalculated from what you report.
What that full price is where you live: the cost above the subsidy cliff in 23 states.
Moving Back Under the Line
Can I lower my income to qualify for the subsidy? Legitimately, yes, because the test is on modified adjusted gross income rather than gross receipts. Deductible retirement contributions, an HSA contribution and the self-employed health insurance deduction all reduce it. If your household is within a few thousand dollars of the line, that arithmetic is usually worth far more than switching to a cheaper plan.
Check your household against the line → · The self-employed premium deduction →
How Long This Lasts
Is the subsidy cliff permanent? It is the law as it stands for 2026 and 2027. The enhanced schedule that removed the cliff between 2021 and 2025 was temporary and expired on 31 December 2025. Congress could restore it, but nothing on the books does so today, so plan on the cliff being real for the coming plan year.
If you are clearly above the line and not close enough to move under it, the question becomes which market to buy in rather than how to recover the credit. Your options above the cliff →