Capital Gains

Capital gains are the profits you make when you sell an asset, like stocks, bonds, real estate, or other investments, for more than you paid for it. Capital gains count as income for Marketplace purposes and can affect your eligibility for premium tax credits and cost-sharing reductions.

There are two types: short-term capital gains (on assets held for one year or less) are taxed as ordinary income. Long-term capital gains (on assets held for more than a year) are taxed at lower rates, but both types are included in your AGI and MAGI.

This matters for health insurance because a large capital gain in a single year can temporarily push your income above the subsidy threshold. With the subsidy cliff back at 400% FPL for 2026, a one-time gain, like selling a home, cashing out an investment account, or receiving a large stock payout and could eliminate your premium tax credit for the entire year, even if your regular income is low.

For example, a household of two with $50,000 in regular income might qualify for significant subsidies. But if they sell a stock holding for a $30,000 profit, their MAGI jumps to $80,000, potentially pushing them over the 400% FPL threshold and triggering full repayment of any advance credit received.

If you're planning a major asset sale, consider the timing. Selling in a year when your other income is lower, or spreading sales across tax years, can help you stay under the subsidy cliff. A tax professional can help you model the impact before you sell.