Millions are dropping Obamacare coverage
About 3 million people who bought health insurance through an Affordable Care Act marketplace, such as healthcare.gov, during open enrollment last year have dropped their coverage as of Feb. 2026. One likely culprit: Reduced tax subsidies.
The premium tax credit is for individuals who buy health insurance through a marketplace. Temporary enhancements ended after 2025. Fewer individuals now qualify for the PTC. And the credit is lower. Before 2021, the PTC was available to people with modified adjusted gross income ranging from 100% to 400% of the poverty level. For 2021-25, some people with higher modified AGIs also qualified, and the credit was higher for many. Congress chose not to act on extending the enhancements, so the rules reverted to those that were in place for pre-2021 years, beginning with 2026 plans purchased through the marketplace.
This is impacting people who enrolled in coverage late last year for 2026. It’s causing their monthly health insurance premiums to rise dramatically compared with 2025. Most people who qualify for the PTC generally have the credit paid in advance to the health insurance firm to lower their monthly premium payment. They elect this when they go to the marketplace to buy insurance. Many people who enrolled in 2026 coverage are experiencing sticker shock and can’t pay, or don’t want to pay, the higher premiums. This has led to millions dropping coverage. Insurers and health policy experts warned that millions would end up uninsured if the temporary PTC easings weren’t renewed, and the numbers are proving them right.
Many health care advocates hope that Congress will tackle the PTC issue. But lawmakers are dragging their feet. Democrats want the pre-2026 easings cleanly extended. Republicans want to narrow the scope of the PTC. The parties appeared close to an agreement earlier this year, but talks have since stalled.
Expect rising health care premiums to play a role in the midterm elections. Democrats hope this will help lead to a blue wave in Nov. and cause them to win one or both chambers of Congress. The GOP is looking to protect its majority. If Dems do win big in Nov., look for expanding Obamacare subsidies to be a top priority.
Note this other key PTC change, beginning with 2026 returns filed in 2027. Individuals who opt to have their PTC paid in advance to health insurance companies must file Form 1040 and attach Form 8962 to reconcile the advance payments and actual PTC. If the PTC is higher, they can claim the credit due on their 1040. If the PTC is less than the advances, they need to repay part or all of the excess. Starting with 2026 returns, all filers with PTC advance payments that exceed the PTC must repay the full amount of the excess, regardless of their reported income. This is different from pre-2026 years, in which taxpayers with incomes below 400% of the poverty level had to repay only a portion of their erroneous credit amounts.
Long Term Care
Premiums you pay for a long-term-care policy are deductible medicals… Subject to two limitations. First, the deduction is capped based on age. The older you are, the higher the tax break. For 2026 tax returns filed next year, taxpayers who are 71 or older can deduct as much as $6,200 per person. Filers age 61 to 70…$4,960. Those who are 51 to 60 can deduct up to $1,860. Individuals 41 to 50 can deduct up to $930. And people age 40 and younger…$500. For 2025 returns, the amounts are $6,020, $4,810, $1,800, $900 and $480.
Second, for most, these premiums are medical costs deductible by itemizers on Schedule A and only to the extent that total medical expenses exceed 7.5% of AGI. There is an exception for self-employeds and others who file Schedule C. These individuals can deduct their health insurance premiums, including for dental, medical and long-term care, on Schedule 1 of Form 1040. They don’t need to itemize.
A tax break related to paying long-term-care premiums has kicked in. Beginning in 2026, employees can withdraw up to $2,600 from their 401(k) plans each year to help pay for long-term-care premiums. And they escape the 10% penalty on pre-age-59½ distributions. The payouts will be subject to regular income tax. IRS has issued guidance on these qualified long-term-care distributions from 401(k)s and other workplace retirement plans, including the required documentation that long-term-care issuers must give IRS and the retirement plan (Notice 2026-33).
In Congress
Here are two congressional proposals that we are keeping an eye on: The first would provide a refundable tax credit for families with newborns. The Supporting Newborn Parents Act would give parents of newborn children a refundable tax credit of up to $2,000 per infant. The proposed tax break, which would be adjusted annually for inflation, would phase out at incomes over $400,000 for joint filers…$200,000 for single filers and heads of household. Note that this credit would be in addition to the $2,200-per-kid child tax credit.
The second would adjust federal tax brackets in high-cost living areas. Two House members from N.Y. introduced the bipartisan Cost of Living Tax Cut Act to raise the dollar amounts in the federal tax brackets for taxpayers who reside in areas in which the cost of living exceeds 125% of the national average. The proposal would not change the tax-rate percentages in each of the brackets. Kiplinger’s online tax group has written a more in-depth story about this proposal, including which taxpayers could be impacted.
Business Taxes
Partnership audits by IRS have been dismal over the past few years. IRS’s audit rate for partnership returns hovers between 0.05% and 0.1%, and the number of exams keeps falling. The agency audited 3,174 partnerships in fiscal year 2025 and expects to examine only 2,932 partnership returns in FY26.
Partnership exams are also narrower, with agents eyeing hot-button issues. IRS’s Large Business and International Division has targeted campaigns that focus on risk areas in which it has found taxpayer compliance to be lacking.
Among the partnership projects: Excess losses claimed by partners. Partners can take flow-through losses from partnerships on their individual returns only to the extent of their adjusted basis in their partnership interest. Excess losses aren’t lost forever. They’re carried forward to a year in which the partnership has basis.
Cash or property distributions that exceed a partner’s basis in a partnership. A partner who receives a distribution of property (not cash) from the partnership must report the distribution on Form 7217 and file it with his or her Form 1040. Partnerships that own sports teams and report large losses on Form 1065.
Scams
Senior citizens are especially at risk of scams and fraud, according to IRS. They’re losing lots of money, including hard-earned retirement funds, to fraudsters through a wide variety of electronic mail and social media ploys.
Among the common schemes: Government impersonation scams, in which scammers manipulate e-mails, text messages or phone calls to make them look like they are from IRS or another government agency. Emergency scams, in which a fraudster claims that a loved one is in peril and needs immediate help. Romance scams, in which criminals build online relationships with seniors and then ask for money. Lottery and sweepstakes fraud, in which potential victims are told they have won a prize but must first pay taxes or fees before collecting it. Investment fraud, in which scammers promise high-return, low-risk opportunities that could involve Ponzi schemes or cryptocurrency fraud. And charity scams, in which fake nonprofits solicit donations, usually after a big disaster or tragedy.
Some individual victims of internet scams can take theft losses. Others can’t. A deductible theft loss must be incurred in a transaction entered into for profit or in a trade or business. Personal theft losses not connected with these two factors are not deductible. In a 2025 legal memo, IRS lawyers addressed five scenarios involving common internet scams and ruled whether a victim could deduct a theft loss. In each fact pattern, the victim owned IRAs or taxable accounts and transferred funds from the accounts to the scammer or to new accounts which the scammer controlled. Taxpayers who were victims of romance or kidnapping scams can’t deduct theft losses because they are personal losses. The result is more favorable for victims of scams in which the scammer convinced them that their existing account was compromised or that they could put funds into an alternative investment with much better returns. Also, victims of Ponzi schemes may get to claim their losses as investment losses.