Form 8962 for 2026: No Cap on Repaying Excess Premium Tax Credit

For years the reconciliation on Form 8962 had a soft landing built into it. If your income came in higher than the estimate you gave the Marketplace, you owed back the extra subsidy, but only up to a ceiling that grew with your income. The ceiling is gone for tax years beginning after 2025, and the 2026 draft instructions, dated October 20 and posted by the IRS on November 5, 2026, say so in the “What’s New” section. That makes the income estimate you give the Marketplace a real financial commitment rather than a rough guess. This guide covers only the repayment side of the form. For how to compute the poverty-line percentage on line 5, see our guide to Form 8962 line 5, which also carries the 2026 applicable-figure table.

What the law and the instructions say

Section 71305 of Public Law 119-21 strikes subparagraph (B) of section 36B(f)(2) of the Internal Revenue Code, the provision that capped excess advance payments, makes two conforming edits, and applies “to taxable years beginning after December 31, 2025.” The IRS translates that into plain English on page 2 of the draft instructions: “if the advance payments of the PTC made on a taxpayer’s behalf exceed the PTC allowed for the year, the taxpayer must repay the full excess amount when filing the tax return. The former repayment limitations based on household income as a percentage of the federal poverty line no longer apply.”

The form itself shows the change. On the 2026 draft, line 27 reads “Excess advance payment of PTC,” tells you to subtract line 24 from line 25, and sends the difference “here and on Schedule 2 (Form 1040), line 1a.” Lines 28 and 29, which held the cap and the smaller-of calculation on the 2025 form, both say “Reserved for future use.” The draft status matters. The IRS notes that drafts of instructions “usually have some additional changes before their final release,” so check the final revision before you file, although the repayment rule itself rests on a statute and is unlikely to move.

The 2025 caps, for comparison

The final 2025 instructions, in Table 5 on page 18, set the repayment limitation that applied to a 2025 return. It depended on the number on line 5 and on filing status:

Line 28 took the amount from that table, and line 29 took “the smaller of line 27 or line 28.” If line 5 was 400 or more, the 2025 instructions say there was “no repayment limitation.” So the 2025 rule was already unforgiving at the top. What changes for 2026 is everything below that: a household that finishes under 400% of the poverty line and still qualifies for the credit no longer gets a ceiling.

Three worked examples, with the cap and without

To show the size of the change, I recomputed three cases using the 2026 draft’s poverty line for one person ($15,650), the applicable figures from its Table 2, and an illustrative benchmark premium of $9,600 a year. I assumed the same premium all twelve months, enrollment in a plan that costs at least that much and no other complications, which makes the arithmetic clean but is simpler than a real Form 1095-A. The capped amount in each case is what Table 5 would have allowed a single filer in the same band, applied to the same excess.

A raise that lands in the middle of the range. A single filer tells the Marketplace she expects $36,000, which is 230% of the poverty line, so the Table 2 figure is 0.0770. Her expected contribution is $2,772 and her advance credit is $9,600 minus $2,772, or $6,828. She finishes the year at $60,000, which is 383%. At that level the figure is 0.0996, her contribution is $5,976, and the credit she is allowed is $3,624. The excess is $6,828 minus $3,624, or $3,204. On a 2025 return the cap for 300% to under 400% was $1,625, so she would have repaid $1,625. On a 2026 return she repays $3,204, which is $1,579 more.

The same filer, slightly past the cliff. Suppose her income is $63,000 instead. That is above 400% (the cutoff for one person is $62,600, and Worksheet 2 of the instructions puts 401 on line 5 for any household income above it), so she enters 401, gets no credit, and repays the full $6,828. The extra $3,000 of income cost her $3,624 in additional repayment, more than the income itself. This is the cliff described in our guide to the 2027 premium tax credit table and the 400% line, now with no cap underneath it.

A smaller miss at low income. A single filer enrolls expecting $20,000 (127%), so the figure is 0.0210, her contribution is $420, and her advance credit is $9,180. She earns $26,000 (166%), where the figure is 0.0496, her contribution is $1,290 (line 8a rounds $1,289.60 to the nearest dollar), and her allowed credit is $8,310. The excess is $870. Under the 2025 table the cap for this band was $375; for 2026 the full $870 is due. The dollar difference is smaller than in the first case, but the full amount is more than double the old cap.

When income goes over 400%

The 2026 draft instructions describe the consequence for the Line 6 question in direct terms: “If the amount on line 5 is 401%, you cannot take the PTC. You must generally repay all APTC paid for individuals in your tax family (but see below for two exceptions).” You then skip lines 7 and 8, enter -0- on line 24, and carry the total of the advance payments to lines 25 and 27, and from there to Schedule 2, line 1a.

The two exceptions reduce or shift the repayment. The first is the alternative calculation for the year of marriage. If you married during 2026 and advance payments were made for someone in your tax family, the instructions say this optional calculation “may reduce the amount of the excess APTC or increase your allowed PTC compared to the general rules.” The IRS sends you to Table 4 and Part V of the form, and to Pub. 974 for the math, so it is worth running both ways when you married during the year. The second concerns coverage for a person who sits in a different tax family. The instructions say that if you enrolled such an individual, “the other tax family may be responsible to repay all or part of the APTC.”

A safety valve under 100% of the poverty line

The draft also changes the opposite end of the range. For years beginning before 2026, some lawfully present immigrants could take the credit with income under 100% of the poverty line. For 2026 the rule is stricter, but the draft instructions on page 10 leave a path for someone whose income came in below 100% after enrolling. You may still qualify for the credit if no one can claim you as a dependent, you or someone in your tax family enrolled through a Marketplace, the Marketplace “estimated at the time of enrollment that your household income would be at least 100% but no more than 400%” of the poverty line, and advance payments were made for at least one month. You must also otherwise qualify as an applicable taxpayer apart from the percentage.

There are two ways to lose it. You do not qualify if no advance payments were made, or if you “with intentional or reckless disregard for the facts, provided incorrect information to a Marketplace.” If you fail the test, you check “Yes” on line 6, skip lines 7 and 8, and move on to line 9.

One more way the credit can disappear

The “What’s New” section adds a rule that can turn into a full repayment without any change in income. For tax years beginning after 2025, a taxpayer is not eligible for the credit for coverage enrolled in through a Marketplace special enrollment period that is based on expected household income relative to the poverty line, “unless the enrollment is associated with a qualifying life event (QLE) or another change in circumstances specified by” HHS. A caution on page 6 of the draft is blunter: “You cannot claim the PTC for coverage that does not meet this requirement.” If advance payments were made for that coverage, there is no allowed credit to offset them, and with the cap gone the result is a repayment of the full amount.

What to do with this before filing

The practical lesson is a timing one. The Marketplace pays the subsidy on your estimate, and the IRS settles up in the spring. With the old ceiling, a late-year raise that left you under 400% of the poverty line cost you at most the Table 5 amount; now it costs whatever the arithmetic says. If you are within sight of 400% of the poverty line, our guide to the bronze plan HSA rules explains how an HSA contribution can pull household income under that line. If you earn less than expected, you can still be due money: when line 24 exceeds line 25, the difference is your net premium tax credit, which goes to line 26 and Schedule 3 (Form 1040), line 9, lowering what you owe or raising your refund.

This guide is general information, not tax advice. Your Form 1095-A, your actual household income and your filing status control the result, so work the form line by line.

Sources

• IRS, Instructions for Form 8962 (2026), draft dated October 20, 2026, posted November 5, 2026, PDF pages 2, 6, 10, 11, 12, 13, 14, 18 and 19: https://www.irs.gov/pub/irs-dft/i8962—dft.pdf
• IRS, Form 8962 (2026), draft created April 21, 2026, lines 6 and 27 to 29: https://www.irs.gov/pub/irs-dft/f8962—dft.pdf
• IRS, Instructions for Form 8962 (2025), final, Table 5 and lines 27 to 29, PDF page 18: https://www.irs.gov/pub/irs-pdf/i8962.pdf
• Public Law 119-21, section 71305, “Eliminating limitation on recapture of advance payment of premium tax credit”: https://www.govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm