TurboTax / Tax Calculators & Tips / All Tax Guides / Tax Deductions and Credits / What is the Premium Tax Credit?

What is the Premium Tax Credit?

Updated for Tax Year 2015


The premium tax credit takes effect beginning in the 2014 tax year, and provides tax savings to offset the cost of health insurance, for those who qualify.

How it works

Health insurance coverage purchased through the Health Insurance Marketplace may be eligible for the premium tax credit. People with moderate incomes can take advantage of the credit “in advance” to offset the cost of coverage or can choose to receive the credit with their tax return, starting in the 2014 tax year.

what is the premium tax credit

Though the open enrollment period started in 2013, these changes do not affect your 2013 tax return.

Your eligibility

You must meet all of the following eligibility criteria to qualify for the premium tax credit:

  • Coverage must originate through the Marketplace.
  • You can’t be eligible for coverage through an employer or government health insurance plan.
  • Your income also must be within a certain range to qualify.
  • You cannot be claimed as a dependent by another person.
  • If you’re married, you and your spouse must file a joint tax return. 

Changes in income and family size may affect your eligibility, so report these to the Marketplace to ensure that you receive the appropriate tax credit. To get more eligibility information, and Marketplace options visit TurboTax.com/health-care. We can even help you estimate how much of a credit you are eligible to receive.

Eligible income ranges

The premium tax credit program uses the federal poverty line as a basis for income range for credit eligibility. The range is 100 percent to 400 percent of the federal poverty line amount for the size of your family for the current tax year. For example, an individual earning between $11,490 and $45,960 meets income criteria to qualify, while a family of four qualifies with household earnings between $23,550 and $94,200 (as of publication). Even if your income indicates eligibility, you must meet the other qualification criteria as well.

Claiming the credit on your return

How you chose to receive the tax credit affects how you report it on your return.

  • If you chose to receive the tax credit in advance (to reduce the cost of insurance), it will be subtracted from the credit calculated on your tax return. If it turns out that the credit you received in advance was less than you were eligible for, it will be added to your tax refund, or it may reduce any tax you owe. It’s also possible that you received more of a credit than you deserved (if your income goes up during the year, for example). In this case, you’d have to “pay back” the overpayment in your tax return.
  • If you chose to get your credit at the time of tax filing, you claim the full calculated amount which increases your refund or lowers the tax you owe.

Remember, when you use TurboTax to prepare your taxes, we’ll ask you simple questions and handle these calculations for you.

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99$34.99*
Start for Free

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

Security is built into everything we do
Here's how
* Important Offer Details and Disclosures
  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Free 1040EZ/A + Free State offer only available with TurboTax Federal Free Edition; Offer may change or end at any time without notice. Actual prices are determined at the time of print or efile and are subject to change without notice. Savings and price comparisons based on anticipated price increase expected 3/18/16. Special discount offers may not be valid for mobile in-app purchases.
  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal efile of up to 5 federal tax returns. Additional fees apply for efiling state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase expected 3/18/16. Prices subject to change without notice.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with efile and direct deposit; tax refund timeframes will vary.
  • Pay for TurboTax out of your federal refund: A $34.99 Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • About our credentialed tax experts: Live tax advice service is available via phone for your toughest tax questions; fees may apply. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Not available for TurboTax Business customers.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2014 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • Benefit Assist: After you file, TurboTax automatically shows you a full list of government benefits you may qualify for, like Food Stamps or reduced phone & utilities. Plus, we help you apply, saving you time and making it easier than ever to get more money! Estimate based on calculation of Benefit Assist users from tax year 2013 and published reports of average benefit and savings amounts from federal and state programs. Benefit Assist users who received one or more federal or state benefits received on average $576 (based on survey March-June 2015). Actual amounts and qualifications based on your individual situation; some individuals will not qualify. Feature may not be available for all customers.