Subsidy Repayment/Clawback

Subsidy repayment, sometimes called a "clawback," happens when you have to pay back some or all of the Advance Premium Tax Credit (APTC) you received during the year because your actual income turned out to be higher than what you estimated on your Marketplace application.

Here's how it works: when you enroll, you estimate your annual income. Based on that estimate, the Marketplace calculates your APTC and applies it to your monthly premiums. At tax time, you reconcile, comparing your estimate to your actual income using Form 8962 and your Form 1095-A. If your income was higher than projected, you received more credit than you were entitled to, and the IRS requires you to pay back the excess.

For the 2026 tax year, this is especially significant because repayment caps have been removed. In prior years (under the enhanced subsidies), there were limits on how much excess APTC you had to repay. With the enhanced subsidies expired as of December 31, 2025, and the subsidy cliff back at 400% FPL, there is no cap on repayment for the 2026 tax year. If your income exceeded 400% FPL, you could owe back your entire advance credit, potentially thousands of dollars.

The best defense is to report income changes to the Marketplace immediately. If you get a raise, start a side job, sell investments, or experience any income change, update your application. The Marketplace will adjust your monthly APTC in real time, reducing the surprise at tax time.

If you discover you owe a large repayment, the IRS does offer installment payment plans for those who can't pay the full amount immediately.