What this line means
The percentage of household income you are expected to contribute toward the cost of your benchmark health plan. You look up this figure in the Applicable Figure Table using your line 5 percentage. Lower-income households have a lower applicable figure, meaning they are expected to pay a smaller share of their income toward premiums and receive a larger credit.
Does this apply to you?
Easy to overlook
The applicable figure is a range, not a flat rate The table uses two figures — a lower and an upper bound — for each income bracket. Your actual applicable figure is interpolated between these two numbers based on exactly where your income falls within the bracket. Filers sometimes grab the wrong number from the table or use only one end of the range, producing an incorrect contribution amount. 1 IRS Form 8962 Instructions — Line 7
The enhanced applicable figures from the Inflation Reduction Act reduce contributions Under the extended enhanced PTC rules, applicable figures are lower than they were before 2021. Filers at the lower end of the income scale have an applicable figure of 0%, meaning they pay nothing toward the benchmark plan and the credit covers the full premium. Even at higher income levels, the percentages are reduced compared to the original ACA schedule. 2 IRS Publication 974 — Premium Tax Credit
Watch out for this
Using an outdated applicable figure table. The applicable figures change with legislation — the Inflation Reduction Act set lower percentages, and those were extended through 2025. If you reference an old form instruction booklet or a pre-2021 table, you will use higher percentages, calculate a larger expected contribution, and claim a smaller credit than you are entitled to. Always use the table from the current year’s Form 8962 instructions.
Footnotes
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IRS Form 8962 Instructions, Line 7, Applicable Figure Table. https://www.irs.gov/instructions/i8962 ↩
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IRS Publication 974, Premium Tax Credit, Applicable Figure. https://www.irs.gov/pub/irs-pdf/p974.pdf ↩