How the 2027 premium tax credit is calculated for a self-employed person: the benchmark, the income cap from 2.15% to 10.22%, what counts as income on a Schedule C, advance payments, and repayment.
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The credit is not a fixed dollar amount and it is not a discount on your plan. It is the gap between the benchmark Silver plan’s price and a cap set as a share of your income. For a 1099 worker, “your income” is the hard part.
Premiums are set county by county and the credit is set by income, so no table can give a 1099 worker a final number. Enter your ZIP and a licensed agent prices every plan filed where you live against what you actually expect to earn.
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Find the second-lowest-cost Silver plan in your county (the benchmark). Multiply your expected household income by the applicable percentage for your income band: 2.15%% at the poverty line, rising to 10.22%% between 300%% and 400%% of it. That is your cap for the benchmark. The credit is the benchmark price minus the cap, and you can spend it on any metal level. Above 400%% of the poverty line, $63,840 for one person in 2027, the credit is zero. The full 2027 table shows the cap at each income.
Modified adjusted gross income for the whole household for the whole year: your net profit from Schedule C (after business expenses), minus the deductible half of self-employment tax, minus the self-employed health insurance deduction, minus retirement contributions (SEP-IRA, solo 401(k), traditional IRA) and other adjustments; plus a spouse’s W-2 wages, investment income, tax-exempt interest and the untaxed part of Social Security. Gross 1099 receipts are not the number. A contractor who bills $90,000 and nets $60,000 after truck, tools and insurance is under the line.
The health insurance deduction lowers the income the credit is measured on, and the credit lowers the premium the deduction is taken on. The IRS publishes an iterative method (Publication 974) for the two together; tax software runs it. The practical effect is that the deduction is worth slightly less and the credit slightly more than a first pass suggests. A tax professional owns this calculation.
The marketplace pays the credit to the insurer monthly in advance, based on the income you estimate at enrollment. Form 8962 reconciles it against actual income at tax time. Estimate high and you get the difference back as a refund. Estimate low and you repay the excess, and from the 2026 tax year there is no cap on that repayment: a low estimate in November becomes a full bill in April. That is the single rule a 1099 worker should respect most.