ACA Subsidy Calculator — Methodology

How This Calculator Works

The ACA Subsidy Calculator estimates your Premium Tax Credit (PTC) under the Affordable Care Act. It works from your Modified Adjusted Gross Income (MAGI) expressed as a percentage of the Federal Poverty Level (FPL) for your household size.

Because MAGI drives the subsidy, the calculator also models how the source of your retirement income changes the result. Qualified Roth withdrawals (and withdrawals of your own Roth contributions) do not count toward MAGI; traditional 401(k) and IRA withdrawals do. Roth earnings taken out before 59½ and five years can count (IRS Pub. 590-B). Shifting the mix can materially change your credit.

Inputs and Assumptions

• Household size: Number of people on the tax return, used to select the FPL figure.
• Age: Used to select the benchmark silver-plan premium. The ACA permits 3:1 age rating.
• Income sources: Traditional withdrawals, Social Security, interest and dividends, capital gains, and wages are combined into MAGI. Roth withdrawals are entered separately and are not added (they are treated as qualified).
• State: Decides whether a low income gets Medicaid, a tax credit, or neither (see below).
• Filing status: Married couples who file separately get no credit (26 U.S.C. §36B(c)(1)(C)).

Assumptions: continental US FPL figures (Alaska and Hawaii use higher schedules and are not modelled). Benchmark premiums are national averages, not your local rating area.

Formula

// First, who gets a credit at all:
//   Medicaid instead of a credit (26 U.S.C. §36B(c)(2)(B)):
//     41 expansion states incl. DC: MAGI ≤ 138% of the 2026 guideline
//     Wisconsin (waiver):            MAGI ≤ 100% of the 2026 guideline
//     (2026 guideline: $15,960 + $5,680 per extra person; Medicaid uses
//      the current year's figures, the credit the previous year's)
//   MAGI under 100% of the 2025 guideline: no credit (§36B(c)(1)(A)).
//     In AL, FL, KS, MS, SC, TN, TX, WY this is the coverage gap; in
//     Georgia too, unless Pathways (work requirement) applies
//   MAGI over 400%: no credit
//   Married filing separately: no credit (§36B(c)(1)(C))

fplPct        = MAGI / FPL(householdSize)
expectedContribution = MAGI × applicablePercentage(fplPct)
premiumTaxCredit     = max(0, benchmarkPremium − expectedContribution)

// FPL for 2026 coverage = 2025 HHS guidelines, continental US
// (the PTC uses the guidelines in effect at the start of open enrolment, 26 CFR 1.36B-1(h))
//   1 person  $15,650
//   2 people  $21,150
//   3 people  $26,650
//   4 people  $32,150
//   each additional person  +$5,500
//
// applicablePercentage — IRS Rev. Proc. 2025-25, linear within each band:
//   100–133% 2.10% · 133–150% 3.14→4.19% · 150–200% 4.19→6.60%
//   200–250% 6.60→8.44% · 250–300% 8.44→9.96% · 300–400% 9.96%
//   under 100% or over 400% of the poverty line → no credit at all

The applicable percentage rises with income, so the credit shrinks as MAGI increases. Above 400% FPL the 2026 table has no row: the credit is zero at any premium. That is the subsidy cliff, back since the enhanced ARPA/IRA schedule (which capped contributions at 8.5% of income) expired on 31 December 2025.

The Withdrawal-Mix Suggestion

With the same total spending, the calculator looks for the traditional/Roth split that gives the largest credit. Inside the credit range a lower MAGI never earns a smaller credit, so the best split is the lowest MAGI that still gets a credit in your state: 100% of the poverty line in a coverage-gap state, or just above the Medicaid line in an expansion state. It never suggests going below that line, because there you would lose the credit entirely. It also never moves more money into an account type than you have: it can use only the Roth and traditional amounts you entered, plus whatever you put in the two optional “most you could take” boxes. With Roth at $0 and nothing in the optional Roth box, there is no better mix to show, so the page shows no savings figure. If your Roth room is smaller than the full move, the calculator moves what it can and shows the smaller saving.

If your MAGI is already below the line in a coverage-gap state, the suggestion goes the other way: take more from traditional accounts so that your income reaches the line. It uses only the traditional amount you entered or the optional traditional box; if that is too small to reach the line, nothing is suggested. If you would likely qualify for Medicaid, the calculator suggests nothing, because a bigger credit there would mean leaving Medicaid.

Data Sources

• US Department of Health and Human Services (HHS) — 2025 Federal Poverty Guidelines, continental US (used for the 2026 credit), and 2026 guidelines (used for 2026 Medicaid).
• 26 U.S.C. §36B — who is an applicable taxpayer (100% to 400% FPL; joint return if married) and the rule that anyone eligible for Medicaid gets no credit.
• Internal Revenue Service (IRS) — Rev. Proc. 2025-25, applicable percentage table for taxable years beginning in 2026.
• HealthCare.gov — the 138% Medicaid line in expansion states, and which year's poverty guidelines Medicaid and the credit each use.
• KFF — Status of State Medicaid Expansion Decisions (41 states including DC adopted, 10 not; read October 2026) and “The Coverage Gap” (July 2026), for Wisconsin's and Georgia's waivers.
• KFF, Marketplace Average Benchmark Premiums (2026) — $625/month national average benchmark silver premium for a 40-year-old, scaled by the CMS federal default age curve (21 = 1.000, 40 = 1.278, 50 = 1.786, 55 = 2.230, 60 = 2.714, 64+ = 3.000; linear between). Children are a flat $250/month estimate, not a published figure.

Limitations

• Legislation could change these rules. The enhanced credits expired on 31 December 2025. A three-year extension passed the House in January 2026 but had not become law at our last check. Results use the 2026 rules in force; if an extension is enacted, they will change.
• Benchmark premiums are national averages. Your actual second-lowest-cost silver plan depends on your rating area and can differ substantially.
• Alaska and Hawaii FPL schedules are not modelled.
• Does not model cost-sharing reductions (CSRs), which are a separate benefit below 250% FPL.
• Medicaid is estimated from annual income. Medicaid itself tests current monthly income, and a few states use a different limit. Parents, people with disabilities and some other groups can qualify under rules this calculator does not model.
• Georgia's Pathways program depends on a work requirement or an exemption, which the calculator cannot check, so below the poverty line it shows Georgia as the coverage gap and names Pathways.
• The married-filing-separately exception for victims of domestic abuse or spousal abandonment is not modelled.
• The withdrawal-mix suggestion compares this year's premium only. It ignores income tax on traditional withdrawals, now or later.
• Does not account for employer-coverage affordability tests that can disqualify you from the credit.
• This is an estimate, not an enrolment quote. Confirm at healthcare.gov before making decisions.

Last Updated

July 2026 — Methodology page published.

October 2026 — Engine and page moved to the 2026 rules: 2025 poverty guidelines, the Rev. Proc. 2025-25 table, and no credit above 400% FPL.

4 October 2026 — No credit below 100% FPL (the engine had charged 2.10% of income down to $0). Medicaid and the coverage gap now follow your state. Married filing separately gets no credit. The withdrawal-mix suggestion never goes below the line where the credit starts.