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ACA Subsidy Cliff Calculator for Gig Drivers (2026)
For 2026, the enhanced health-insurance subsidies are gone and the cliff is back: earn one dollar over 400% of the federal poverty line and the premium tax credit drops to zero. Because mileage and retirement contributions lower the income the marketplace looks at, a gig driver can sometimes change which side of the line they land on. This calculator shows your credit, your distance from the cliff, and what it would take to get back under. All amounts are in US dollars (USD). Nothing you type leaves your browser.
What would get you under the line
Estimate for planning only, based on 2026 IRS and HHS figures, in USD. Marketplace eligibility has more rules than income: affordable employer coverage, Medicaid or CHIP, immigration status, filing status, and others. Your marketplace and Form 8962 decide the final figure. How we calculate.
How to use this calculator
- Enter household size and where you live. The poverty line, and so the cliff, depends on both. Alaska and Hawaii have higher guidelines.
- Enter gig earnings, miles for each half of the year, and other expenses. The calculator uses the same net-profit and self-employment-tax math as our 1099 gig tax calculator.
- Add W-2 wages and other income for everyone on the return. A spouse's pay can decide which side of the line you are on.
- Enter the benchmark premium (next section) and any SEP-IRA contribution you already plan.
- Read the what-if box. If you are over the line, it tells you the smallest number of extra miles or the smallest contribution that would bring you back under.
How to find your benchmark premium
The credit is not a fixed percentage of your plan's price. It is the benchmark premium, minus a share of your income the law expects you to pay. The benchmark is the second-lowest-cost Silver plan available to your household, whichever plan you actually buy.
- On HealthCare.gov or your state marketplace, start an application or use the window-shopping tool. Enter your ZIP code and the age of each person to be covered.
- In the plan results, filter to Silver plans and sort by monthly premium, lowest first.
- Take the second plan in the list. Use its price before any credit. If the household's plans are priced per person, add them up.
- Already enrolled? Your Form 1095-A (sent in early the following year) lists the second lowest cost silver plan premium for each month.
Make sure the tool shows 2026 prices: the 2026 credit uses them.
What the result means
Percent of poverty line. Your MAGI divided by the poverty guideline for your household size. For 2026 the credit uses the 2025 HHS guidelines: $15,650 for one person plus $5,500 for each additional person in the 48 states and D.C. ($19,550 plus $6,880 in Alaska; $17,990 plus $6,330 in Hawaii).
Expected contribution. The share of income the law expects you to put toward the benchmark plan. For 2026 it rises from 2.10% of income for households under 133% of the poverty line to 9.96% from 300% to 400%, and the rate slides smoothly between those points.
Annual credit. The benchmark premium for the year minus your expected contribution, never below zero. If your result shows $0 even though you are under the line, your income is high enough that the expected contribution is already larger than the benchmark price, so there is no subsidy to lose.
Distance to the line. The 400% line in dollars, minus your MAGI. A positive number is your room; a negative number is how far over you are. Being $300 under is not safe if your income could come in higher than expected: one good December can erase the whole credit.
What counts as income: MAGI
The IRS defines MAGI for this credit as your adjusted gross income plus tax-exempt interest, non-taxable Social Security benefits, and excluded foreign income. For a gig driver, the pieces that matter are:
| Item | Lowers MAGI? |
|---|---|
| Business expenses, including the standard mileage deduction | Yes (reduces net profit) |
| Half of self-employment tax | Yes |
| Self-employed health insurance deduction | Yes |
| SEP-IRA or deductible traditional IRA contribution | Yes |
| Standard deduction | No (taken after AGI) |
| Qualified tips deduction, senior deduction | No (taken after AGI) |
| QBI deduction (20% of business income) | No (taken after AGI) |
| Tax-exempt interest, non-taxable Social Security | Added back, raising MAGI |
The tips deduction can wipe out income tax and still leave your subsidy income untouched. Mileage does both jobs.
Three examples
Each example below was produced by the same engine as the calculator. All use the 48-state poverty line, 2026 mileage rates, and no other income unless stated.
1. Comfortably under the line
Single. $36,000 of gig earnings, 10,000 business miles (5,000 each half), $900 of other expenses, benchmark premium $620 a month.
- Net profit $27,675; MAGI $25,720, which is 164% of the poverty line
- Expected contribution $1,250 (4.86% of income)
- Annual credit $6,190 ($516 a month), with $36,880 of room before the 400% line at $62,600
Nothing to fix here.
2. Just over the cliff, rescued
Single. $84,000 of gig earnings, 18,000 business miles (9,000 each half), $1,500 of other expenses, benchmark premium $620 a month.
- Net profit $69,135; MAGI $64,251, or 410% of the poverty line. The 400% line is $62,600, so this driver is $1,651 over
- Credit as filed: $0
- Option A: log 2,338 more business miles at the July–December 76¢ rate ($1,777 of deduction). Because less profit also means a smaller half-SE-tax deduction, it takes slightly more than the overage divided by the rate. MAGI drops to $62,599
- Option B: contribute $1,651 to a SEP-IRA (room: $12,850). MAGI drops to $62,600
- Either way the credit becomes $1,205 at 399% of the poverty line
The mileage option only works if the driver really drove, and logged, those extra miles. If the miles exist, they belong in the log; if not, the SEP route can still be decided after December. The credit saved ($1,205) is smaller than the $1,651 contributed, so weigh that the SEP money is not freely spendable, though it also lowers income tax.
3. A couple with a W-2 income, where a SEP is the lever
Household of two filing jointly. One partner drives: $70,000 of gig earnings, 12,000 business miles (6,000 each half), $1,200 of other expenses. The other earns $36,000 in W-2 wages. Benchmark premium for the two of them: $1,250 a month.
- Net profit $59,890; MAGI $91,659, or 433% of a $21,150 poverty line. The 400% line is $84,600: $7,059 over
- Credit as filed: $0
- Mileage would need about 9,995 more documented miles ($7,596 of deduction), a large addition on top of 12,000
- A $7,059 SEP-IRA contribution (room $11,131) brings MAGI to $84,600 and the credit to $6,574 for the year
Family premiums are large, so the cliff is worth far more here than in example 2. A SEP contribution of $7,059 protects $6,574 of subsidy, and the contribution is also deductible for income tax.
How the calculation works
- AGI = W-2 wages + net profit (earnings − mileage − expenses) + other income − half of SE tax − self-employed health insurance deduction − SEP or IRA contribution.
- MAGI = AGI + tax-exempt interest and non-taxable Social Security.
- Percent of poverty line = MAGI ÷ the poverty guideline, rounded down to a whole percent as on Form 8962.
- Expected contribution = MAGI × the applicable percentage, found by straight-line interpolation inside each band of the 2026 table.
- Credit = benchmark premium × 12 − expected contribution, if you are at least at 100% and no more than 400% of the poverty line; otherwise zero.
- The what-if search finds the smallest extra mileage that gets MAGI to the line; a SEP contribution counts dollar for dollar.
Form 8962 uses IRS tables rounded to four decimals, so your return can differ by a few dollars. We assume full-year coverage at the benchmark price; partial years and mid-year household changes are not modeled.
What this calculator does not decide
Meeting the income test is necessary but not sufficient. You also need to be enrolled through the marketplace, not be eligible for affordable employer coverage (for 2026, that means the employee's share of the cheapest self-only plan is not above 9.96% of household income), not be eligible for Medicaid or CHIP, not be claimed as someone's dependent, and generally file jointly if you are married. Below 100% of the poverty line, the credit is normally unavailable except for certain lawfully present immigrants. Nothing here is tax or insurance advice; confirm with the marketplace or a tax professional.
Frequently asked questions
Did the enhanced ACA subsidies really end, and is the 400% cliff back for 2026?
Yes. The temporary expansion from the American Rescue Plan and Inflation Reduction Act covered tax years 2021 through 2025. For 2026 the IRS says premium tax credit eligibility again requires household income of at least 100% but no more than 400% of the federal poverty line, and the 2026 applicable percentage table tops out at 9.96%. CMS describes the enhanced subsidies as expired at the end of 2025. Bills to restore them have been debated, but none had become law when we last checked on October 11, 2026.
What happens if my income is one dollar over 400% of the poverty line?
You lose the entire credit for the year, not just a slice of it. If you took advance payments during the year, you owe back the full amount at tax time. That is why the line is called a cliff: the loss is the same whether you are $1 over or $10,000 over.
Which income counts: gross earnings or profit?
Neither exactly. The test uses modified adjusted gross income (MAGI): your adjusted gross income plus tax-exempt interest, nontaxable Social Security benefits, and excluded foreign income. For a driver, adjusted gross income starts from net profit (earnings minus mileage and other business expenses) and subtracts half of your self-employment tax. Your spouse's income counts on a joint return.
Does the tips deduction or the senior deduction lower my MAGI for the subsidy?
No. Those deductions are taken after adjusted gross income, so they cut your income tax but not the income used for the premium tax credit. Business expenses, the standard mileage deduction, the deductible half of self-employment tax, the self-employed health insurance deduction, and SEP-IRA or traditional IRA contributions all reduce adjusted gross income, so they do help.
How do I find my benchmark premium?
The benchmark is the second-lowest-cost Silver plan for everyone on your application. On HealthCare.gov (or your state marketplace), enter your ZIP code, household members, and ages, open the plan list, filter to Silver, sort by premium before the credit, and read the monthly price of the second plan. Add the prices for each person if the plans are priced per person. If you already have coverage, your Form 1095-A shows this amount in the column for the second lowest cost silver plan premium.
I took advance payments based on a lower income. What if I end the year higher?
You reconcile on Form 8962 with your tax return. For tax years before 2026 there were dollar caps on how much of an excess advance payment you had to repay. The IRS says there is no repayment cap for tax years after 2025, so you repay the full difference. If you are over 400%, that means all of it. Update your income estimate with the marketplace during the year if your earnings change.
Can I add miles or a SEP-IRA contribution after the year ends?
Only one of the two. A SEP-IRA contribution for 2026 can be made, and a new SEP can be set up, as late as the due date of your 2026 return including extensions, so it can be decided after you know your final numbers. Mileage is different: it is only deductible if you actually drove the miles for business and have a record made at the time. The calculator's mileage figure tells you how many more real, documented miles you would need; it is not a suggestion to estimate miles you did not drive.
Is a SEP-IRA contribution a good way to stay under the line?
It can be, but it moves money into a retirement account you cannot freely spend, and the limit is about 20% of your net earnings after the deductible half of self-employment tax, up to $72,000 in 2026. The calculator shows the contribution needed next to the credit it would protect, so you can compare. A tax professional can check how it fits your situation.
What else can make me ineligible even if I am under the line?
A lot. Affordable employer coverage offered to you (cost for 2026 at or below 9.96% of household income), eligibility for Medicaid or CHIP in your state, being claimed as someone else's dependent, filing married filing separately in most cases, and certain immigration statuses can all affect eligibility. Income below 100% of the poverty line usually means no credit, with exceptions for some lawfully present immigrants. This calculator checks the income rules only.
Sources
- IRS, Fact Sheet 2025-10: Questions and answers on the Premium Tax Credit (400% limit restored after 2025, MAGI definition, no repayment cap after 2025, which poverty guideline applies)
- IRS, Rev. Proc. 2025-25 (2026 applicable percentage table, 2.10% to 9.96%, and the 9.96% employer-coverage affordability percentage)
- HHS, Annual Update of the HHS Poverty Guidelines, 90 FR 5917 (2025 guidelines: 48 states and D.C., Alaska, Hawaii)
- IRS, Instructions for Form 8962 and Publication 974, Premium Tax Credit (household income, MAGI, whole-percent rounding, self-employed health insurance deduction)
- IRS, Eligibility for the Premium Tax Credit
- CMS, HHS Notice of Benefit and Payment Parameters for 2027 (describes the enhanced subsidies as expired at the end of 2025)
- HealthCare.gov, Savings on Marketplace coverage and second lowest cost Silver plan
- IRS, Publication 560, Retirement Plans for Small Business (SEP deadline and the 20% limit for the self-employed) and Notice 2025-67 ($72,000 limit for 2026)
- IRS, 2026 business standard mileage rate (72.5¢; 76¢ from July 1, 2026 per Announcement 2026-11)
Related: 1099 gig tax calculator · no tax on tips calculator · mileage log guide.