IRS issues 2019 inflation adjustments for ACA tax credits and excise taxes

Tax Hot Topics newsletter The IRS has issued 2019 inflation adjustments (Rev. Proc. 2018-34) for the percentages of household income used to calculate the premium tax credit under the Affordable Care Act and to determine if required employee contributions meet the affordability test for the purpose of ACA excise taxes.

The premium tax credit under Section 36B is generally calculated in a way to limit a taxpayer’s out-of-pocket premium contributions to a certain percentage of household income. This percentage is adjusted each year and for 2019 are as follows:

Household income percentage of Federal poverty line

ACA also subjects employers to potential excise taxes if they fail to offer adequate and affordable coverage. In order for minimum essential coverage to qualify as affordable, the required employee contributions must be below a certain percentage of household income. This percentage is adjusted annually, and for plan years beginning in 2019, is 9.86% of the employee’s household income.

Contact Jeffrey Martin
Partner, Washington National Tax Office
T +1 202 521 1526

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