Penalty Tax Calculations
Tax penalties begin in 2014 and rise in the following years. Each year, the tax consists of the higher of a set dollar amount, or a percentage of household income, whichever is lower. For a given household, the tax applies to each individual, up to a maximum of three.
ACA Tax Penalty Schedule
- 2014: The higher of $95 per person (up to 3 people, or $285) OR 1.0% of taxable income.
- 2015: The higher of $325 per person (up to 3 people, or $975) OR 2.0% of taxable income.
- 2016: The higher of $695 per person (up to 3 people, or $2,085) OR 2.5% of taxable income.
- After 2016: The same as 2016, but adjusted annually for cost-of-living increases.
Tax Penalty Examples
- 2014 – Family of 2 with a taxable income of $26,000. Penalty Tax is $260; because $260 ($26,000x 1%) is more than $190 ($95 x 2 persons).
- 2014 – Family of 3; with a taxable income of $26,000. Penalty Tax is $285; because $285 ($95×3 persons) is more than $260 ($26,000 x 1%).
- 2014 – Family of 3; with a taxable income of $50,000. Penalty Tax is $500; because $500 ($50,000 x 1%) is more than $285 ($95 x 3 persons).
- 2015 – Family of 3; taxable income of $26,000. Penalty Tax is $975; because $975 ($325 x 3) is more than $525 ($26,000 x 2%).
- 2016 – Family of 3; taxable income of $26,000. Penalty Tax is $2,085; because $2,085 ($695 x 3) is more than $650 ($26,000 x 2.5%).
- After 2016 – The same as 2016, but adjusted annually for cost-of-living increases.
See More at: ObamaCare Tax Penalty Rates 2014 – 2016