Health & Medicare
ACA Subsidy Cliff Calculator
Based on IRS Revenue Procedure 2025-25 and each state's own 2026 supplemental program filings, updated August 2026.
Check how close your income is to the 2026 subsidy cliff at 400% of the federal poverty level, and whether your state runs a supplemental program that softens the drop.
Data sourced from IRS Revenue Procedure 2025-25, Covered California, NY State of Health, Mass Health Connector, WA Health Benefit Exchange
Federal credit at stake at the 400% FPL cliff
$0
How this is calculated
Source: IRS Rev. Proc. 2025-25 (cliff formula), state marketplace filings (CA/NY/MA/WA supplemental programs) · Last updated 2026-08-21 · See how we calculate this →
Want a full personalized credit estimate instead? Use the ACA Premium Tax Credit Estimator.
The 400% FPL cliff, and which states actually soften it
Most income-based benefits phase out gradually. The ACA premium tax credit does not, at least not for 2026. Once household income crosses 400% of the federal poverty level (FPL), the federal premium tax credit does not shrink toward zero, it simply becomes zero.
A household earning $500 over the line gets the exact same $0 federal subsidy as a household earning $50,000 over it. This all-or-nothing jump is what earned the nickname "subsidy cliff."
The cliff was effectively suspended from 2021 through 2025. The American Rescue Plan Act removed the 400% ceiling and capped everyone's expected contribution at 8.5% of income, and the Inflation Reduction Act extended that arrangement through the end of 2025.
Both were always temporary. Congress did not pass an extension before the enhancement expired December 31, 2025, so the cliff is back in full for 2026, along with required contribution percentages that run higher across every income band than what 2025 enrollees paid.
A handful of states did not simply let their residents absorb the full impact. California funds its own Covered California premium subsidy, New York layers state-funded cost-sharing reductions on top of federal assistance, Massachusetts poured a nine-figure state investment into its ConnectorCare program, and Washington runs Cascade Care Savings alongside the federal credit.
It is worth being precise about what these programs actually do for 2026, though: every one of them is capped at or below 400% of FPL. They cushion the loss of the expired federal enhancement for people who are already inside the federal subsidy range, they do not extend any assistance to residents above the 400% line.
As of 2026, no state has fully eliminated the cliff itself for higher earners, only California, New York, Massachusetts, and Washington are confirmed to run any supplemental program at all; everywhere else, the federal cliff is the whole story.
If your income sits close to 400% FPL, this matters more than it might seem. A relatively small raise, a bonus, extra freelance income, or a spouse picking up more hours, can push a household from a meaningful credit to $0 in a single tax year.
Because the credit reconciles against actual income at tax time (IRS Form 8962), legitimately lowering your MAGI, through pre-tax retirement contributions or HSA contributions, for example, can be a genuinely useful lever if you expect to land close to the line.
Frequently asked questions
What exactly is the "subsidy cliff"?
It is the income point, 400% of the federal poverty level for 2026, where your federal ACA premium tax credit drops from whatever it was down to exactly $0, with no gradual phase-out.
Earning $1 over the line can mean losing thousands of dollars a year in subsidy all at once.
Did any state get rid of the cliff entirely?
Not as of 2026. California, New York, Massachusetts, and Washington all run their own supplemental subsidy programs, but every one of them is capped at or below 400% FPL, they cushion the loss of the federal enhanced credits for people already inside the federal eligibility range, they do not extend help to anyone above the 400% FPL line.
Is there any way to avoid the cliff if I am right at the line?
Because the credit is based on your actual household income for the year (reconciled at tax time via Form 8962), legally reducing your MAGI, for example through pre-tax retirement contributions or HSA contributions, can keep you under 400% FPL and preserve your credit. This is a common, legitimate year-end planning move, not a loophole.
Why did the cliff come back for 2026?
The American Rescue Plan Act (2021) removed the cliff temporarily, and the Inflation Reduction Act extended that removal through 2025. Those enhancements had a fixed expiration date of December 31, 2025.
Congress did not pass an extension before that deadline, so the original ACA rules, cliff included, are back for 2026 coverage.