Filling out an ACA application means estimating your income for the year ahead—but what counts as income? What if you're self-employed, freelance, or your income fluctuates wildly?
Don't sweat it. In this guide, we'll break down how to estimate your income for ACA purposes, avoid costly mistakes, and increase your chances of getting the maximum subsidy you deserve.
First: What Counts as Income for ACA?
The ACA uses Modified Adjusted Gross Income (MAGI)—which is more than just your salary. Here's what typically counts:
✅ Income That Counts:
- Wages, salaries, and tips
- Freelance and 1099 income
- Self-employment income
- Unemployment benefits
- Social Security (taxable and some non-taxable)
- Rental income
- Dividends, interest, and capital gains
🚫 Income That Doesn't Count:
- Child support received
- Veteran's disability payments
- Supplemental Security Income (SSI)
Estimating Income If You're Employed
This is the easiest case. Just use:
- Your most recent pay stub × number of pay periods
- Add expected bonuses or commissions
Example: Salaried Employee
You make $4,000/month and get paid 12 times a year = $48,000/year
If you expect a raise, promotion, or reduction in hours—factor that in too.
If You're Self-Employed or Freelancing
Now things get trickier. Your MAGI is your net income (after business expenses) plus any non-deductible contributions or tax-free income sources.
Steps to estimate:
- Start with your gross projected revenue for the year
- Subtract legitimate business expenses
- Add back any deductions ACA doesn't allow (e.g., foreign income exclusions)
Tip: Use last year's tax return as a starting point and adjust for changes.
👉 Use Our ACA Subsidy Calculator
Test different income scenarios to see how they affect your subsidy. Get instant results in under 2 minutes.
Try the Calculator →Income That Varies? Use a Range.
If your income fluctuates—seasonal work, side hustles, gig economy—use a reasonable range and average it over 12 months.
Example: Variable Income
You expect to make $2,000/month for 6 months, and $5,000/month for the other 6 = $42,000/year
Document your math somewhere. If the IRS ever questions it, you'll have a paper trail.
Mistakes That Can Cost You
- ❌ Guessing too low: You might owe some or all of your subsidy back at tax time
- ❌ Leaving out income: The IRS will compare with your tax return
- ❌ Forgetting spouse or dependent income: Household MAGI includes everyone filing taxes with you
For more details on income thresholds, check out our 2026 ACA income limits guide.
How to Report Changes Mid-Year
Life happens. If you:
- Get a raise or lose hours
- Switch jobs
- Start a side gig
You must update your Marketplace application ASAP to avoid under- or over-payment of subsidies.
Final Word
Estimating your ACA income isn't about being perfect—it's about being realistic and thorough. When in doubt, estimate a little high to avoid payback surprises, and update your info if things change.
Take 5 minutes and use the calculator below to see how your estimated income affects your subsidy.
✅ Try the 2026 ACA Subsidy Calculator
See exactly how your income estimate affects your premium tax credit. No email or signup required.
Calculate Your Subsidy →