Estimating your income when you’re self-employed

It’s net profit, not revenue

For subsidies, your income is your net self-employment profit — what’s left after business expenses — projected for the whole year and counted as part of your household’s modified adjusted gross income. Your gross revenue isn’t the figure that matters; your bottom line is. That distinction works in your favor, because legitimate business expenses bring the countable number down.

The variable-income challenge

Self-employment income swings from month to month, which makes the year-ahead estimate the Marketplace asks for genuinely hard. The stakes cut both ways. Estimate too high and you get a smaller advance credit during the year — though you recover the difference at tax time. Estimate too low and you may have to repay credits, and starting in 2026 there’s no longer a cap on that repayment, so a lowball guess carries more risk than it used to.

How to estimate

Start from last year’s net profit, then adjust for what you realistically expect to change — a new recurring client, a slow season, a contract ending. Lean toward a realistic-to-slightly-conservative figure. If your income is genuinely unpredictable, it’s safer to estimate on the higher side and get money back at tax time than to underestimate and owe it back, especially now that the repayment cap is gone.

Update as you go

You’re not locked into your January guess. If your income shifts meaningfully during the year — a banner quarter or a dry spell — report the change in your Marketplace account, and it recalculates your credit for the remaining months. A quick mid-year check keeps any gap from compounding into a large bill or a large refund.

Deductions and contributions lower the number

Because the figure that counts is MAGI, the same moves that cut your taxable income help here. Legitimate business deductions, the self-employed health insurance deduction, and contributions to a SEP-IRA, solo 401(k), or Health Savings Account all reduce your countable income — which can lower your premium and, if you’re near the 400% cliff, preserve a subsidy you’d otherwise lose.

The bottom line

Estimate from your net profit, build in a margin, update mid-year if things change, and use your deductions and retirement contributions as levers. Our guides to what counts as income and staying under the cliff go deeper on both. When you’re ready to see how different income levels change your cost, you can compare plans through PlanMatch Health.