Why the PTC cannot exceed your Marketplace plan premium
Use the lesser-of formula when the benchmark-based credit is larger than the premium for the plan actually selected.
For 2026, monthly PTC is limited to the enrollment premium for the qualified plan. The formula uses the lesser of that premium or the applicable SLCSP premium minus the monthly household contribution, so a low-cost chosen plan can cap the credit.
Run both sides of the lesser-of test
First calculate the benchmark side: applicable SLCSP premium minus the monthly contribution amount, with no negative result. Then compare that result with the enrollment premium reported in column A after required refunds, unpaid-premium adjustments, or allocations. The smaller figure is the monthly credit before any QSEHRA adjustment that applies.
Do not substitute the plan you bought for the benchmark
The selected plan sets the maximum credit, but it does not replace the SLCSP in the benchmark calculation. A Bronze, Silver, Gold, or Platinum qualified plan can receive PTC; its metal level does not change the statutory comparison. A catastrophic plan cannot support PTC at all.
Plan-choice example and common errors
A household's benchmark minus contribution is greater than the premium for its chosen Bronze plan. The credit stops at the Bronze enrollment premium, potentially reducing the household's premium to zero but never creating a cash payment for the unused difference. Using the benchmark result without the cap overstates PTC; using the Bronze premium as column B understates the benchmark.
Keep the benchmark and cap as separate inputs
The SLCSP minus the household contribution measures benchmark assistance; the enrollment premium limits how much credit can be used for the plan actually selected. Calculate both amounts for each required month and retain the smaller. Refunds, unpaid amounts, nonessential benefits, and allocations can alter the enrollment-premium side of the comparison.
Recompute the cap after a plan switch, premium refund, shared-policy allocation, or payment adjustment because column A can change independently of the benchmark.
Lesser-of formula checks
- Use column B only for the applicable SLCSP.
- Use adjusted column A amounts for the selected-plan cap.
- Confirm the monthly credit never exceeds either side of the formula.
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Authorities used for this guide
Sources checked .
- IRS: 2025 Instructions for Form 8962
2025 excess advance credit repayment caps only - IRS / Treasury: Final regulations defining a PTC coverage month
Post-2024 unpaid-premium coverage months and the monthly lesser-of PTC formula - IRS: Publication 974 - Premium Tax Credit
Detailed PTC special situations, allocations, employer arrangements, and self-employed deductions