What income does the Marketplace use for 2027?
The Marketplace uses modified adjusted gross income, or MAGI, to set the 2027 premium tax credit. The federal law, 26 U.S.C. 36B(d)(2), defines it as adjusted gross income plus three items:
| Start with | Add |
|---|---|
| Adjusted gross income, Form 1040 line 11 | Social Security benefits that aren’t taxed |
| Tax-exempt interest, such as municipal bond interest | |
| Foreign earned income and housing excluded from tax |
Nothing else is added. For 2027 coverage, the number is an estimate of 2027 income. The 2027 tax return settles it.
Whose income counts in the household?
Household income adds the MAGI of everyone in the tax household who is required to file a federal return (26 CFR 1.36B-1(e)). That’s you, a spouse on a joint return, and any dependent who must file.
A dependent who files only to get withheld tax back doesn’t add income. The IRS’s dependent filing thresholds for 2027 aren’t published yet, as of Oct. 24, 2026.
What counts as income, and what doesn’t?
HealthCare.gov’s income list sorts the common types:
| Counts | Doesn’t count |
|---|---|
| Wages from a job (federal taxable wages) | Supplemental Security Income (SSI) |
| Tips | Child support |
| Self-employment income | Gifts |
| Unemployment compensation | Loan proceeds, such as student or home equity loans |
| Social Security, including SSDI | Veterans’ disability payments |
| Retirement and pension income | Workers’ compensation |
| Investment income and capital gains | Child Tax Credit payments from the IRS |
| Rental and royalty income | Alimony that isn’t taxable to the person receiving it |
| Alimony that is taxable to the person receiving it | |
| Excluded (untaxed) foreign income |
“Federal taxable wages” matters. Money an employer takes out before tax for health coverage, child care or retirement savings is not in taxable wages, so it doesn’t count.
How do you estimate 2027 income?
HealthCare.gov’s estimating steps come down to three:
- Start with adjusted gross income from your most recent federal tax return, Form 1040 line 11.
- Add untaxed Social Security (including tier 1 railroad retirement), tax-exempt interest and untaxed foreign income. Leave out SSI.
- Adjust for 2027: raises, new jobs, changes in hours or self-employment income, changes in Social Security or investments, and people joining or leaving the household.
After a job loss, count the wages already earned in 2027 plus unemployment benefits and taxable severance. COBRA vs. Marketplace in 2027 compares the two ways to stay covered.
Self-employed people and anyone paid on commission can base the estimate on past years and recent trends. Then compare the result with the 2027 federal poverty level chart, or let the FPL calculator do the division.
Do the new tips, overtime and senior deductions lower MAGI?
The new deductions from P.L. 119-21 don’t lower Marketplace income. The IRS puts the deductions for tips, overtime, seniors and car-loan interest on Schedule 1-A. The IRS says the Schedule 1-A total goes on Form 1040 line 13b (IRS FS-2026-04).
Line 13b comes after adjusted gross income on line 11. So a server who deducts tips, or a worker who deducts overtime pay, still counts all of that pay as ACA income. The deductions lower income tax, not the credit’s income test.
What can lower ACA income for 2027?
Anything that lowers adjusted gross income lowers MAGI. Two common ones for Marketplace enrollees:
- Pre-tax payroll deductions. Retirement, health and child care money taken out before tax never reaches taxable wages.
- HSA contributions. Every bronze and catastrophic Marketplace plan has counted as an HSA-eligible plan since January 1, 2026 (P.L. 119-21, section 71307; IRS Notice 2026-5). A deductible HSA contribution lowers adjusted gross income.
Catastrophic plans get no premium tax credit, so the HSA route usually means a bronze plan. Contribution limits and rules are the IRS’s: check them with a tax professional before counting on one.
How close is an early retiree to the 400% line?
Coverage Decider worked this example for one person in the 48 contiguous states. The 2026 poverty guideline is $15,960, so 400% is $63,840. Percentages are rounded to two decimals.
| Single early retiree, 2027 | Amount |
|---|---|
| Adjusted gross income (pension and IRA withdrawals) | $60,000 |
| Plus tax-exempt bond interest | $3,000 |
| Plus untaxed Social Security | $2,000 |
| MAGI | $65,000 (407.27% of the poverty line) |
| Premium tax credit | None: over 400% |
| Same person, with a $1,500 deductible HSA contribution | $63,500 (397.87%) |
| Expected payment for the benchmark plan at 10.22% | $6,490 a year, rounded to the dollar |
At $63,500, the credit is the benchmark silver plan’s yearly price minus $6,490, if the plan costs more than that. The bond interest and untaxed Social Security pushed this household over the line, though neither shows up in adjusted gross income. See the 2027 subsidy cliff for every household size.
What happens if the estimate is wrong?
The 2027 tax return settles the credit on actual income, and from tax year 2026 on there is no cap on paying it back. See premium tax credit repayment in 2027. Reporting a change to the Marketplace within 30 days keeps the gap small.
Coverage Decider’s calculator turns a 2027 income estimate, household and ZIP code into the credit, so you can try a few income levels. How we calculate lists the rules it uses. This is not tax advice. For your own situation, use HealthCare.gov, free local help or free IRS VITA help. Open enrollment runs Nov. 1, 2026 to Jan. 15, 2027: see 2027 open enrollment dates.