# Dependent Income Exclusion Act of 2025

This bill changes how the government calculates whether families qualify for health insurance subsidies under the Affordable Care Act. Right now, when the government decides if you can get help paying for health insurance premiums, it counts all the income in your household—including money your kids earn from jobs. This bill says that for certain young dependents, their work income shouldn't count against you when determining if you qualify for those subsidies.

Specifically, the bill excludes the wages and self-employment income of dependents who are under 18 years old, or under 24 if they're a full-time or part-time student, participating in a job-training program, or in an apprenticeship. So if your 16-year-old works at a fast-food restaurant and earns $5,000 a year, or your 22-year-old college student has a part-time job, that money won't be counted when figuring out your household income for insurance subsidy purposes. This could help families qualify for more generous tax credits to reduce their monthly insurance premiums.

There's one important limit: this exclusion only applies up to 15 percent of your total household income. If your dependents' combined earnings exceed that threshold, the excess gets counted. Additionally, families in states that haven't expanded Medicaid get extra protection—the bill won't reduce your household income below the poverty line when calculating your eligibility. The changes take effect for tax years beginning after the bill becomes law, meaning families could see the benefit when they apply for 2026 health insurance coverage.

Dependent Income Exclusion Act of 2025

Horsford, Steven

Dependent Income Exclusion Act of 2025This bill excludes the wages and net earnings from self-employment of a dependent of a taxpayer&nbsp;from the calculation of total household income for purposes of determining eligibility for and the amount of the refundable premium tax credit, subject to limitations.Under current law, eligible taxpayers may be able to claim the premium tax credit, which applies toward the cost of obtaining health insurance through health insurance exchanges. To be eligible for the credit, a taxpayer’s household income must meet or exceed 100% of the federal poverty level (FPL). For tax years before 2021 and after 2025, taxpayers must have a household income that meets or exceeds 100% but is less than 400% of the FPL to be eligible for the tax credit.Further, under current law, the calculation of the premium tax credit is based, in part, on taxpayers’ household income such that taxpayers with lower household incomes are eligible for a higher premium tax credit.The bill excludes from household income the wages and net earnings from self-employment of a dependent of the taxpayer who (1) is under 18 years old; or (2) is under 24 years old and is, during&nbsp;any five calendar months of the year, a full- or part-time student in an educational organization (excluding for-profit educational institutions), is in an apprentice program, or is participating in a job training program.The amount that may be excluded is limited to 15% of the taxpayer’s modified adjusted gross income.&nbsp;