Tax Relief: Excluding Dependent Income for Health Credit Calculations
This act aims to ease access to health insurance premium tax credits. It allows certain earned income of children and young adults to be excluded from household income calculations, potentially helping families qualify for larger health premium subsidies. These changes could reduce health insurance costs for many families.
Key points
Earned income of dependents under 18 will not be counted towards household income for health insurance credit calculations.
Income of young adults (up to 24) who are students or in job training programs may also be excluded, under specific conditions.
The dependent income exclusion has a limit: it cannot exceed 15% of the taxpayer's modified adjusted gross income.
In states that have not expanded Medicaid, the dependent income exclusion cannot reduce household income below the poverty line.
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