Rev. Proc. 2026-26, July 21, 2026

The Internal Revenue Service has issued Revenue Procedure 2026-26 to establish the necessary indexing adjustments for the 2027 calendar year. This guidance specifically targets the administrative and procedural requirements for determining tax liability and eligibility for certain tax credits. As stated in the guidance, "This revenue procedure provides indexing adjustments to the applicable percentage table (Applicable Percentage Table) in § 36B(b)(3)(A)(i) of the Internal Revenue Code (Code) for taxable years beginning in calendar year 2027." This table serves as the foundational mechanism for calculating an individual’s premium tax credit under § 36B. Furthermore, the procedure establishes the "Required Contribution Percentage (Required Contribution Percentage) in § 36B(c)(2)(C)(i)(II) for plan years beginning in calendar year 2027," which is utilized to determine whether an individual meets the threshold for affordable employer-sponsored minimum essential coverage under § 36B.

Legislative Basis and Methodological Shifts

The IRS derives its authority for these adjustments from the established methodology for calculating premium and income growth, as outlined in section 4 of Rev. Proc. 2014-37. However, tax professionals should note a significant shift in the underlying data metrics applied to these calculations. Previously, the rate of premium growth was tethered primarily to "per enrollee spending for employer-sponsored insurance as published in the National Health Expenditure Account."

Starting with the 2026 benefit year, the methodology underwent a substantive change following the HHS Marketplace Integrity and Affordability rule (90 Fed. Reg. 27074). Under this revised framework, the "premium growth measure...captures increases in individual market premiums in addition to increases in employer-sponsored insurance premiums." For the 2027 adjustments, the Treasury Department and the IRS have applied this expanded premium growth measure alongside income growth projections to arrive at the updated percentages.

Assessment of Statutory Exceptions

In evaluating the necessity of the adjustments, the IRS must also determine the applicability of statutory exceptions. Specifically, the IRS examined the "additional adjustment provided in § 36B(b)(3)(A)(ii)(II)." For the 2027 plan years, the IRS has determined that this additional adjustment is unnecessary. The determination is predicated on the fact that "the failsafe exception described in § 36B(b)(3)(A)(ii)(III) applies for plan years beginning in calendar year 2027." Consequently, the adjustments provided in this Revenue Procedure are limited to the base table and the required contribution percentage without the additional layer of adjustment precluded by the failsafe provision.

Summary of Adjusted Values for 2027

The application of the aforementioned growth measures results in the following finalized values for the 2027 tax and plan years. The Applicable Percentage Table for purposes of § 36B(b)(3)(A)(i) and § 1.36B-3(g) is defined as follows:

Household income less than 133% of the Federal poverty line: 2.15% (Initial) to 2.15% (Final)
Household income at least 133% but less than 150% of the Federal poverty line: 3.23% (Initial) to 4.3% (Final)
Household income at least 150% but less than 200% of the Federal poverty line: 4.3% (Initial) to 6.78% (Final)
Household income at least 200% but less than 250% of the Federal poverty line: 6.78% (Initial) to 8.66% (Final)
Household income at least 250% but less than 300% of the Federal poverty line: 8.66% (Initial) to 10.22% (Final)
Household income at least 300% but not more than 400% of the Federal poverty line: 10.22% (Initial) to 10.22% (Final)

Additionally, for plan years beginning in calendar year 2027, the "Required Contribution Percentage for purposes of § 36B(c)(2)(C)(i)(II) and § 1.36B-2(c)(3)(v)(C) is 10.22%." These figures are effective for all taxable years and plan years commencing in calendar year 2027.

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