Question

What happens if I underestimate my income?

When you enroll you estimate your income for the year, and that sets your advance premium tax credit. At tax time you reconcile that estimate against your actual income on IRS Form 8962. If you earned more than you projected and received too much credit, you repay the excess — and starting with the 2026 tax year, there’s no longer a cap on how much you have to pay back.

Reviewed by Scott Stafford, Licensed Insurance Agent

Last updated

The subsidy you get during the year is an advance, based on your best guess at your income. The Marketplace trues it up later: when you file your taxes, you compare the credit you received against the credit your actual income entitled you to. If you underestimated and got too much, the difference is added to your tax bill; if you overestimated, you get the rest back as a refundable credit.

What changed for 2026 is the stakes. Through 2025, if your income stayed under 400% of poverty, the amount you had to repay was capped. That cap is gone starting with 2026 returns, so underestimating can mean repaying the full difference. The practical takeaways: estimate carefully, and if your income rises during the year — a raise, a good quarter, a capital gain — update your application so the Marketplace can adjust your credit before the gap grows. Our subsidies guide has more.

Common questions

Related questions

Can I update my income during the year?
Yes, and you should if it changes. Logging into your Marketplace account to report a new income estimate recalculates your credit for the rest of the year, which reduces what you might owe at tax time.
What if I overestimated my income?
Then you claimed too little credit during the year, and you get the difference back as a refundable credit when you file — there’s no penalty for overestimating.

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