I heard the American Rescue Plan also exempts some unemployment insurance (UI) benefits from federal taxation in 2020. Will that affect my premium tax credit for last year?

Yes.  The American Rescue Plan exempts up to $10,200 in UI benefits from federal income tax.  People who received UI benefits in 2020 will be able to reduce their adjusted gross income by up to that amount, and so reduce their federal income tax liability. 

In addition, if you bought health coverage through the marketplace in 2020, you may be eligible for more premium tax credit than you claimed during the year. 

Federal agency implementation of the new law is underway, so details about how to file your taxes (or an amended return if you filed already) to take advantage of this change are not yet available.  When the Internal Revenue Service (IRS) provides more information, this FAQ will be updated.

While we have made every effort to provide accurate information in these FAQs, people should contact the health insurance Marketplace or Medicaid agency in their state for guidance on their specific circumstances.

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Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in San Francisco, California.