The ACA subsidy cliff is back for 2026 — here’s what changed

Published 2026-07-01 · Updated July 2026

For four years the American Rescue Plan and Inflation Reduction Act softened the ACA subsidy cliff — capping benchmark premiums at 8.5% of income even above 400% of poverty. Those enhanced credits expired December 31, 2025, and Congress did not extend them.

The result for 2026: the original cliff is back. Earn more than 400% of the federal poverty level and your premium tax credit drops to zero. KFF reports the above-400% cohort — just 3% of 2025 sign-ups — accounted for 27% of the drop in 2026 enrollment.

Key takeaway

If your 2026 MAGI lands even one dollar above 400% of the federal poverty level, your ACA premium subsidy is $0 — there is no phase-out for 2026 coverage. The fix is legal and available before year-end: lowering MAGI through retirement or HSA contributions can restore the subsidy entirely.

If your 2026 income is anywhere near the line, the first move is to check where you land — then plan the legal moves before year-end.