The short answer
Very likely, if the gain is taxable. For 2026 the premium tax credit is again limited to households at or below 400% of the federal poverty line, because the temporary rule that removed that ceiling covered only taxable years beginning before January 1, 2026. A sale gain counts in household income for the whole year, and Public Law 119-21 removed the cap on repaying excess advance credit starting in 2026, so you would pay back every advance dollar on your return. A fully deferred 1031 exchange recognizes no gain and leaves household income where it was.
At a glance
| 2026 eligibility ceiling | 400% of the poverty line |
|---|---|
| Poverty line used for 2026 | 2025 guidelines: $15,650 for one, plus $5,500 per added person |
| 400% for one person | $62,600 in the 48 contiguous states and DC |
| 400% for two | $84,600 |
| 2026 required contribution | 2.10% to 9.96% of household income |
| Repayment of excess advance credit | No cap from 2026 |
| Fully deferred exchange | Gain not recognized, so not in household income |
For 2026 the credit has a hard income ceiling again
Section 36B(c)(1)(A) defines an applicable taxpayer as one whose household income 'equals or exceeds 100 percent but does not exceed 400 percent' of the poverty line. Subparagraph (E) suspended the 400 percent limit only for taxable years beginning after December 31, 2020 and before January 1, 2026.
With that rule expired, the credit for 2026 is zero once household income passes the line, however expensive your premium. That is a cliff, not a phase-out.
In dollars, using the 2025 guidelines, the ceiling is $62,600 for a household of one and $84,600 for a married couple with no dependents. Each additional household member adds $22,000 of room. Alaska and Hawaii use their own, higher guidelines.
Below the ceiling, Rev. Proc. 2025-25 sets the share of income you are expected to pay toward the benchmark plan for 2026 at 2.10% at the bottom of the scale rising to 9.96% between 300% and 400%.
Sale gain counts in household income for the whole year
Household income is the modified AGI of you and any dependents required to file. Under section 36B(d)(2)(B), modified AGI is AGI plus excluded foreign income, tax-exempt interest and the untaxed part of Social Security, so capital gain and depreciation recapture count in full.
The poverty line for a 2026 credit is the one published before open enrollment for 2026. Reg. section 1.36B-1(h) uses the guidelines 'in effect on the first day of the initial or annual open enrollment period preceding that taxable year', which are the 2025 guidelines: $15,650 for one person plus $5,500 for each additional person in the 48 contiguous states and DC.
Credit is figured on annual income, so a sale in December affects every month of coverage that year.
Excess advance credit is now repaid in full
If you receive the credit in advance, it is paid to your insurer based on the income estimate you gave the Marketplace. Section 36B(f)(2) increases your tax by any excess of advance payments over the credit you actually qualify for.
Until 2025 that repayment was capped for households under 400% of the poverty line. Section 71305 of Public Law 119-21 struck the limitation for taxable years beginning after December 31, 2025, so for 2026 the full excess comes back on Form 8962 with your return.
If you sell during the year, updating your Marketplace income estimate promptly reduces the advances you would otherwise repay the following April.
Worked example: $45,000 of income and a $150,000 gain
Hypothetical; the advance credit amount is invented for illustration; run your own numbers with your CPA. A single 60-year-old expects $45,000 of 2026 income, about 288% of the poverty line, and receives $700 a month of advance credit, $8,400 for the year.
She sells a rental with a $150,000 gain. Household income becomes $195,000, far above the $62,600 ceiling, so her 2026 credit is zero and the full $8,400 is added to her tax, on top of the tax on the gain.
Exchange the whole property and income stays at $45,000, keeping the credit. The cliff is unforgiving with boot, though: any recognized gain above $17,600 pushes her past $62,600 and costs the entire credit.
Where an exchange or the replacement changes the answer
Full deferral under section 1031 keeps the gain off your return entirely. Cash left over at the end of the exchange is boot and counts in household income (leftover cash after an exchange).
Replacement income counts too. A Delaware Statutory Trust interest reports rental income each year, which enters household income the same way your current rents do, so check the projected taxable income against the ceiling before you choose it; see traditional DST exchanges.
If you plan to sell rather than exchange, consider timing: a sale in a calendar year with no Marketplace coverage at all, such as the first full year after you enroll in Medicare, does not touch the credit, and an installment sale under section 453 spreads the gain across years. The Medicare side has its own look-back (Medicare premiums after a rental sale).
Related questions
Does the 400% ceiling apply to every state?
The percentage applies everywhere, but Alaska and Hawaii use higher poverty guidelines, so their dollar ceilings are higher.
Is there still a cap on repaying excess credit?
Not for 2026. Public Law 119-21 removed the repayment limitation for taxable years beginning after December 31, 2025.
Does depreciation recapture count toward household income?
Yes. All recognized gain is in AGI, and AGI is the base of household income under section 36B.
Will a partial exchange protect the credit?
Only if the recognized boot keeps household income at or under 400% of the poverty line; one dollar over removes the whole credit.
Does Social Security count?
Yes. Section 36B adds back the untaxed part of benefits, so the full benefit amount counts toward household income; see Social Security tax after a rental sale.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.