The short answer: if you bought health insurance through HealthCare.gov or a state Marketplace and got monthly help with your premiums, your tax return is where that help is checked against your actual income. If your income came in higher than you estimated, you pay some of the help back. Starting with 2026 returns, there's no limit on how much you may have to repay. If your income came in lower, you may get more back.
You'll need Form 1095-A from the Marketplace to file. Here's how it all works.
What the premium tax credit is
The premium tax credit helps people pay for health insurance bought through the Marketplace. How much help you get depends on your household income and family size compared with the federal poverty line, and on the cost of a benchmark plan where you live.
Most people take the credit in advance: the Marketplace estimates it when you sign up, based on the income you expect, and pays it straight to your insurer every month. That's the advance premium tax credit. It lowers your monthly premium.
Because it's based on an estimate, it has to be settled up when you file.
How the settling up works
On Form 8962, you:
- Enter your actual household income for the year.
- Figure the credit you actually qualified for, month by month, using the figures on your 1095-A.
- Compare that with the advance payments made to your insurer.
Then one of three things happens:
| If... | Then... |
|---|---|
| You qualified for more than was paid in advance | You get the difference as a refundable credit, which increases your refund or lowers what you owe |
| You qualified for exactly what was paid | Nothing changes |
| You qualified for less than was paid | You repay the difference. It comes out of your refund or adds to what you owe |
What's new for 2026: no repayment cap
In past years, if your income was under 400% of the federal poverty line, the amount you had to repay was capped, sometimes at a few hundred dollars, even if you'd received thousands too much.
Starting with tax year 2026, those caps are gone. If you received more advance help than you qualified for, you repay the full difference.
A worked example
Jamie is single and signed up for a Marketplace plan expecting to earn $32,000 in 2026. Based on that, the Marketplace paid $350 a month toward the premium, $4,200 for the year.
Jamie got a raise mid-year and earned $45,000. At that income, Jamie only qualified for $2,100 of credit for the year.
| Amount | |
|---|---|
| Advance credit paid to the insurer | $4,200 |
| Credit Jamie actually qualified for | $2,100 |
| Excess Jamie repays on the 2026 return | $2,100 |
Under the old rules, a repayment cap might have limited what Jamie paid back. For 2026, the full $2,100 comes out of Jamie's refund or adds to the tax Jamie owes.
(These numbers are illustrative. Your credit depends on your local benchmark plan and your household.)
How to avoid a surprise bill
Report changes to the Marketplace right away
The IRS says to report these promptly so your monthly help is adjusted:
- A change in household income, like a raise, a new job, or starting side work
- A move to a new address
- A change in employment
- Marriage or divorce
- A birth, adoption or someone leaving your household
If your income goes up mid-year and you tell the Marketplace, your monthly help drops for the rest of the year, and you won't owe it all back at tax time.
Estimate all your income when you sign up
Include side income such as gig work, freelance pay, unemployment and investment income. Those are easy to forget.
Take less in advance if you're unsure
You can choose to take only part of your credit in advance, or none at all, and claim the rest when you file. It means higher monthly premiums, but a smaller risk of owing at tax time.
Watch your withholding
If you expect to repay some of the credit, you can increase the tax withheld from your paycheck to cover it.
Form 1095-A: the form you need
The Marketplace sends Form 1095-A by early February. It shows, for each month you were covered:
- Column A: the monthly premium for your plan
- Column B: the premium for the second-lowest-cost silver plan in your area, which is the benchmark used to figure your credit
- Column C: the advance credit paid to your insurer
You need it to fill out Form 8962. If you received advance payments, you must file a return and include Form 8962, even if your income is low enough that you wouldn't otherwise have to file. Leaving it out can delay your refund and can make you ineligible for help next year.
If your 1095-A is wrong, for example it lists the wrong people or months, contact the Marketplace and ask for a corrected one before you file.
If you didn't get one, log in to your HealthCare.gov or state Marketplace account. It's usually available there to download.
Common situations
You got married during the year. Special rules can lower what you repay for the months before you married. Your tax software will ask.
You shared a policy with someone outside your household, such as an ex-spouse. You'll need to agree on how to split the 1095-A amounts.
You had Marketplace coverage for only part of the year. You only reconcile the months shown on your 1095-A.
You got a job with affordable health coverage partway through the year. Once you're eligible for affordable employer coverage, you generally can't get the premium tax credit for those months. Tell the Marketplace and end or change your plan.
Frequently asked questions
I didn't get advance payments, but I bought a Marketplace plan. Can I still get the credit? Yes. If you paid full price and qualify, you can claim the whole credit on Form 8962 when you file.
Does the end of the cap affect my 2025 return? No. It starts with the 2026 tax year, the return you file in 2027.
Is the credit taxable income? No. It's a tax credit, not income.
What if I can't pay what I owe? File on time anyway. The IRS offers payment plans, and filing on time avoids the failure-to-file penalty.
Related guides
This post is general information, not tax advice for your situation. Sources: IRS, Repayment caps eliminated for excess advance payments of the premium tax credit; IRS, Premium tax credit: claiming the credit and reconciling advance payments.