Roth conversions and the ACA subsidy in 2026

An example

A married couple, 62 and 60, on a marketplace plan: a $30,000 pension, $2,500 of interest and $9,000 of qualified dividends, no Social Security yet, and $900,000 in a traditional IRA.

1. MAGI without a conversion$41,500
2. +Roth conversionthe most that keeps MAGI on the line$43,100
3. =MAGI with the conversionthe 400% line for a household of two$84,600

The conversion adds $4,684 of federal tax. One more dollar and the couple is over the line, with no credit for the year.

Under the line, the credit shrinks too

Staying under 400% keeps the credit, but not all of it. The share of MAGI you are expected to pay toward the benchmark silver plan rises with MAGI, and the credit is the benchmark premium minus that amount. In the example:

1. Expected contribution with the conversion9.96% × $84,600$8,426.16
2. −Expected contribution without it6.42% × $41,500$2,664.30
3. =Credit the conversion gives up$5,761.86
4. +Federal tax the conversion adds$4,684
5. =Cost of converting $43,10024.2% of the amount converted. Not counted: at 196% of the poverty line this couple also gets cost-sharing reductions, which the conversion ends (below)$10,445.86

The credit falls by the full $5,761.86 only while the benchmark plan costs at least $8,426.16 a year. When it costs less, the credit was already smaller and the loss is smaller too. Check the credit at both incomes in the ACA subsidy calculator with 2026 as the coverage year and your benchmark premium.

Roth conversions and cost-sharing reductions

If you qualify for cost-sharing reductions (CSR), choosing a Silver marketplace plan gives you lower deductibles, copays or coinsurance, and a lower out-of-pocket limit. The premium tax credit lowers your premium. CSR lowers what you pay when you use care.

The taxable part of a Roth conversion raises the annual household MAGI used for CSR eligibility. For the standard income-based reductions on a Silver plan:

• Above 150% of the federal poverty level (FPL), you move to a lower level of cost-sharing reductions.
• Above 200% FPL, the reductions step down again.
• Above 250% FPL, these reductions end, even if you still qualify for a premium tax credit.

Staying under 400% FPL does not protect these extra savings. The calculator above does not include the cost of losing them. In the ACA subsidy calculator, keep the coverage year, household size and state the same, then compare your MAGI before and after the conversion. Check your Silver-plan quote for the actual deductible, copays and coinsurance; the tool shows CSR tiers and out-of-pocket limits, not a prediction of your medical bills.

Filling the 12% bracket instead

The same couple could convert $100,500 before leaving the 12% bracket, for $12,919 of federal tax. That puts MAGI at $142,000, $57,400 over the line, and the 2026 credit is lost in full. Which way costs more depends on your benchmark premium, which your marketplace quote shows. The line for other household sizes is in the 2026 cliff table.

Timing

A conversion counts for the year it is made, so a 2026 conversion has to be made by December 31, 2026, and it cannot be undone afterwards (why). The marketplace pays the credit in advance from your estimate; your 2026 return settles it against your actual income, and for tax years after 2025 any advance credit above what you qualify for is repaid in full.

Calculations, not tax, legal or investment advice.