---
title: IRS raises affordability threshold for 2026
description: IRS raises ACA affordability threshold for 2026 to 9.96%. Employer non-compliance can result in penalties.
---

[News & Insights](https://insights.bukaty.com)

# [IRS raises affordability threshold for 2026](https://insights.bukaty.com/irs-raises-affordability-threshold-for-2026)

 Written by [Bukaty Companies](https://insights.bukaty.com/author/bukaty-companies) | July 23, 2025

Employers averaging 50-plus full-time equivalent employees in the prior calendar year are deemed applicable large employers and are subject to Affordable Care Act (ACA) affordability requirements. The IRS sets a threshold to determine the affordability of employer-sponsored health coverage and premium tax credit (PTC) eligibility. The affordability rate for the 2026 plan year is [set](https://www.irs.gov/pub/irs-drop/rp-25-25.pdf) at 9.96% of total annual household income, an increase from the 2025 limit of 9.02%.

Failure to provide benefit-eligible employees with an affordable, minimum value health coverage option can result in employer shared responsibility penalties pursuant to [IRS guidelines](https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions). Lower-income employees who are not offered satisfactory coverage may be eligible for a PTC through [Healthcare.gov.](https://www.healthcare.gov/)

The affordability threshold applies on a plan-year basis, not the calendar year. Non-calendar plans year should continue using the 9.02% rate until the 2026 plan renewal.

| **YEAR** | **AFFORDABILITY %** | **MAXIMUM MONTHLY PREMIUM CONTRIBUTIONS\*** | **FEDERAL POVERTY LEVEL (FPL)** |
| --- | --- | --- | --- |
| 2026 |  9.96%  |  $129.89  |  $15,650  |
| 2025 |  9.02%  |  $113.20  |  $15,060  |
| 2024 |  8.39%  |  $101.94  |  $14,580  |

\**Maximum an employee could pay for employer-sponsored, self-only coverage using the* [*FPL*](https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines) *affordability safe harbor. Employers may also adopt the rate-of-pay or W-2 affordability safe harbors.*

[View full post](https://insights.bukaty.com/irs-raises-affordability-threshold-for-2026)

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