diff --git a/changelog.d/ptc-refundable-credit-net-income.changed.md b/changelog.d/ptc-refundable-credit-net-income.changed.md
new file mode 100644
index 00000000000..1932be01e5a
--- /dev/null
+++ b/changelog.d/ptc-refundable-credit-net-income.changed.md
@@ -0,0 +1 @@
+Count the federal premium tax credit in household net income and household tax as a refundable tax credit (household_refundable_tax_credits), whether or not health benefits count in net income, so changes to it reach net income and the budget. income_tax and SPM resources are unchanged.
diff --git a/policyengine_us/parameters/gov/household/household_health_benefits.yaml b/policyengine_us/parameters/gov/household/household_health_benefits.yaml
index ba051538c04..6d9c4a2c7f4 100644
--- a/policyengine_us/parameters/gov/household/household_health_benefits.yaml
+++ b/policyengine_us/parameters/gov/household/household_health_benefits.yaml
@@ -4,7 +4,8 @@ values:
     - medicaid_cost
     - msp_cost
     - chip
-    - assigned_aca_ptc
+    # The federal premium tax credit counts as a refundable tax credit
+    # (household_refundable_tax_credits) whether or not health benefits do.
     - assigned_ca_premium_subsidy
     - basic_health_program
     - co_omnisalud
diff --git a/policyengine_us/parameters/gov/household/household_health_costs.yaml b/policyengine_us/parameters/gov/household/household_health_costs.yaml
index e19592dc88b..6eb5cd92cbc 100644
--- a/policyengine_us/parameters/gov/household/household_health_costs.yaml
+++ b/policyengine_us/parameters/gov/household/household_health_costs.yaml
@@ -2,7 +2,10 @@ description: The government counts these sources as household health out-of-pock
 values:
   2022-01-01:
     - chip_premium
-    - marketplace_net_premium
+    # The whole premium: household net income counts the premium tax credit
+    # that pays part of it as a refundable credit, so the net premium would
+    # count the credit twice.
+    - selected_marketplace_plan_premium_proxy
 
 metadata:
   unit: list
diff --git a/policyengine_us/tests/core/test_behavioral_response_measurements.py b/policyengine_us/tests/core/test_behavioral_response_measurements.py
index 7ef5166ee81..55814bca7fc 100644
--- a/policyengine_us/tests/core/test_behavioral_response_measurements.py
+++ b/policyengine_us/tests/core/test_behavioral_response_measurements.py
@@ -649,7 +649,8 @@ def test_semi_elasticity_capital_gains_response_end_to_end_from_a_zero_rate():
     """The semi-elasticity form through the model, from a 0% baseline rate.
 
     A Texas filer whose $30,000 of gains sit in the 0% bracket faces a new 10%
-    rate there. The semi-elasticity response depends only on the change in the
+    rate there. The filer has employer coverage, so no premium tax credit
+    phases out with the gains. The semi-elasticity response depends only on the change in the
     measured rate, so it is about 29% at 3.4, where the log-rate form's 0.001
     floor would remove about 96% (test_capital_gains_response_forms.py covers
     the forms' arithmetic without a simulation).
@@ -659,7 +660,13 @@ def test_semi_elasticity_capital_gains_response_end_to_end_from_a_zero_rate():
     year = "2026"
     gains = 30_000
     situation = {
-        "people": {"p": {"age": {year: 50}, "long_term_capital_gains": {year: gains}}},
+        "people": {
+            "p": {
+                "age": {year: 50},
+                "long_term_capital_gains": {year: gains},
+                "has_esi": {year: True},
+            }
+        },
         "tax_units": {"tu": {"members": ["p"]}},
         "families": {"f": {"members": ["p"]}},
         "spm_units": {"s": {"members": ["p"]}},
diff --git a/policyengine_us/tests/core/test_estate_income_invariants.py b/policyengine_us/tests/core/test_estate_income_invariants.py
index 4e458c5a79d..271584b08d0 100644
--- a/policyengine_us/tests/core/test_estate_income_invariants.py
+++ b/policyengine_us/tests/core/test_estate_income_invariants.py
@@ -480,7 +480,8 @@ def test_estate_income_raises_household_net_income_by_its_after_tax_amount(
     A single Texas filer with $50,000 of wages in 2024 receives $10,000 of
     estate income, which stays in the 12% bracket. Texas has no income tax
     and estate income carries no payroll tax, so household net income rises
-    by the $10,000 less the federal income tax increase.
+    by the $10,000 less the federal income tax increase. The filer has
+    employer coverage, so no premium tax credit falls as income rises.
     """
 
     def net_income(estate):
@@ -488,6 +489,7 @@ def net_income(estate):
             "age": {2024: 40},
             "employment_income": {2024: 50_000},
             "estate_income": {2024: estate},
+            "has_esi": {2024: True},
         }
         if qualified is not None:
             head["estate_income_would_be_qualified"] = {2024: qualified}
diff --git a/policyengine_us/tests/core/test_marginal_tax_rate_coverage.py b/policyengine_us/tests/core/test_marginal_tax_rate_coverage.py
index a15eb5199b7..da71909814a 100644
--- a/policyengine_us/tests/core/test_marginal_tax_rate_coverage.py
+++ b/policyengine_us/tests/core/test_marginal_tax_rate_coverage.py
@@ -179,6 +179,7 @@ def test_raising_the_cap_only_adds_people(mtr_by_cap, variable):
 # wages less the $14,600 standard deduction ($75,400, $45,400, $15,400), so a
 # $1,000 raise is taxed at 22%, 12% and 12%, plus 7.65% employee payroll tax.
 # Nobody crosses a bracket or payroll threshold, and Texas has no income tax.
+# Each has employer coverage, so no premium tax credit phases out with a raise.
 ROOMMATE_WAGES = (90_000, 60_000, 30_000)
 ROOMMATE_RATES = {
     "marginal_tax_rate": (0.2965, 0.1965, 0.1965),
@@ -193,7 +194,11 @@ def test_roommates_match_hand_computed_rates(cap):
     names = [f"roommate{i}" for i in range(len(ROOMMATE_WAGES))]
     situation = {
         "people": {
-            name: {"age": {YEAR: 40 - 5 * i}, "employment_income": {YEAR: wages}}
+            name: {
+                "age": {YEAR: 40 - 5 * i},
+                "employment_income": {YEAR: wages},
+                "has_esi": {YEAR: True},
+            }
             for i, (name, wages) in enumerate(zip(names, ROOMMATE_WAGES))
         },
         "tax_units": {f"{name}_tax_unit": {"members": [name]} for name in names},
diff --git a/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/irs_gross_income/military_retirement_pay.yaml b/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/irs_gross_income/military_retirement_pay.yaml
index befdc3853b7..e8f58b1a6cc 100644
--- a/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/irs_gross_income/military_retirement_pay.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/irs_gross_income/military_retirement_pay.yaml
@@ -7,6 +7,7 @@
 
 - name: Case 1, Military retirement pay flows into federal gross income, AGI, and taxable income.
   period: 2024
+  absolute_error_margin: 0.01
   input:
     people:
       person1:
@@ -28,7 +29,10 @@
     household_market_income: 30_000
     snap_unearned_income: 30_000
     ssi_unearned_income: 30_000
-    household_net_income: 28_384
+    # With no other coverage, a 2024 marketplace credit under the enhanced
+    # schedule, which household net income counts as a refundable credit.
+    premium_tax_credit_in_force: 10_323.72
+    household_net_income: 28_384 + 10_323.72
 
 - name: Case 2, Military retirement pay survivors flows into federal gross income, AGI, and taxable income.
   period: 2024
@@ -56,6 +60,7 @@
 
 - name: Case 3, Military retirement pay adds with employment income.
   period: 2024
+  absolute_error_margin: 0.01
   input:
     people:
       person1:
@@ -77,7 +82,10 @@
     taxable_income: 70_000 - 14_600
     market_income: 70_000
     household_market_income: 70_000
-    household_net_income: 59_699
+    # The enhanced schedule's credit above 400% FPL: the benchmark premium
+    # minus 8.5% of income.
+    premium_tax_credit_in_force: 2_846.77
+    household_net_income: 59_699 + 2_846.77
 
 - name: Case 4, Dependent military retirement pay is excluded from the tax unit filer gross income.
   period: 2024
diff --git a/policyengine_us/tests/policy/baseline/gov/local/tax/local_tax_rollup.yaml b/policyengine_us/tests/policy/baseline/gov/local/tax/local_tax_rollup.yaml
index c3baf64f188..271e8be6dac 100644
--- a/policyengine_us/tests/policy/baseline/gov/local/tax/local_tax_rollup.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/local/tax/local_tax_rollup.yaml
@@ -91,6 +91,7 @@
 
 - name: Indiana county tax flows from earnings to household and SPM totals
   period: 2021
+  absolute_error_margin: 0.01
   input:
     state_code: IN
     county_str: BOONE_COUNTY_IN
@@ -101,8 +102,10 @@
     local_income_tax: 735
     local_income_tax_before_refundable_credits: 735
     local_tax: 735
-    household_tax: 9_037.7
-    household_net_income: 40_962.3
+    # The 2021 premium tax credit lowers household tax, not the SPM's taxes.
+    premium_tax_credit_in_force: 1_275.24
+    household_tax: 9_037.7 - 1_275.24
+    household_net_income: 40_962.3 + 1_275.24
     spm_unit_local_tax: 735
     spm_unit_taxes: 9_037.7
     spm_unit_net_income: 36_824.8
diff --git a/policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/integration.yaml b/policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/integration.yaml
index 437b949c97f..e11bb67c787 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/integration.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/integration.yaml
@@ -698,14 +698,18 @@
     # 2,339.51 - 1,250 = 1,089.51.
     state_income_tax: 1_089.51
     household_refundable_state_tax_credits: 1_250
-    # Federal 2021 recovery rebate credit 1,400 + MT rebate 1,250 = 2,650.
-    household_refundable_tax_credits: 2_650
+    # With no other coverage, a 2021 marketplace credit under the enhanced
+    # schedule.
+    premium_tax_credit_in_force: 2_272.79
+    # Federal 2021 recovery rebate credit 1,400 + MT rebate 1,250 + premium
+    # tax credit 2,272.79 = 4,922.79.
+    household_refundable_tax_credits: 4_922.79
     # Federal income tax 4,295 (TI = 50,000 - 12,550 = 37,450;
     # 10% x 9,950 + 12% x 27,500 = 995 + 3,300) + employee payroll tax
     # 3,825 (7.65% x 50,000) + MT line 20 2,339.51 = 10,459.51.
     household_tax_before_refundable_credits: 10_459.51
-    # 50,000 + 2,650 - 10,459.51 = 42,190.49 (40,940.49 without the rebate).
-    household_net_income: 42_190.49
+    # 50,000 + 4,922.79 - 10,459.51 = 44,463.28 (43,213.28 without the rebate).
+    household_net_income: 44_463.28
     # SPM resources rise by the same 1,250 through spm_unit_state_tax:
     # 36,802.99 without the rebate + 1,250 = 38,052.99.
     spm_unit_net_income: 38_052.99
@@ -744,14 +748,19 @@
     # 2,518.22 - 2,500 = 18.22.
     state_income_tax: 18.22
     household_refundable_state_tax_credits: 2_500
-    # Federal 2021 recovery rebate credit 2 x 1,400 + MT rebate 2,500 = 5,300.
-    household_refundable_tax_credits: 5_300
+    # With no other coverage, a 2021 marketplace credit for both under the
+    # enhanced schedule.
+    premium_tax_credit_in_force: 8_500.58
+    # Federal 2021 recovery rebate credit 2 x 1,400 + MT rebate 2,500 +
+    # premium tax credit 8,500.58 = 13,800.58.
+    household_refundable_tax_credits: 13_800.58
     # Federal income tax 3,790 (TI = 60,000 - 25,100 = 34,900;
     # 10% x 19,900 + 12% x 15,000 = 1,990 + 1,800) + employee payroll tax
     # 4,590 (7.65% x 60,000) + MT line 20 2,518.22 = 10,898.22.
     household_tax_before_refundable_credits: 10_898.22
-    # 60,000 + 5,300 - 10,898.22 = 54,401.78 (51,901.78 without the rebate).
-    household_net_income: 54_401.78
+    # 60,000 + 13,800.58 - 10,898.22 = 62,902.36 (60,402.36 without the
+    # rebate).
+    household_net_income: 62_902.36
     # SPM resources rise by the same 2,500 through spm_unit_state_tax:
     # 47,581.78 without the rebate + 2,500 = 50,081.78.
     spm_unit_net_income: 50_081.78
diff --git a/policyengine_us/tests/policy/baseline/household/household_health_benefits.yaml b/policyengine_us/tests/policy/baseline/household/household_health_benefits.yaml
index c02d64382ee..27e54bfb1c6 100644
--- a/policyengine_us/tests/policy/baseline/household/household_health_benefits.yaml
+++ b/policyengine_us/tests/policy/baseline/household/household_health_benefits.yaml
@@ -12,7 +12,7 @@
     household_health_benefits: 0
     household_benefits: 0
 
-- name: Case 2, flag on includes annual canonical ACA PTC and Medicaid value.
+- name: Case 2, flag on includes the Medicaid value; the ACA PTC counts as a refundable tax credit instead.
   period: 2026
   absolute_error_margin: 0.01
   input:
@@ -21,8 +21,8 @@
     medicaid_cost: 500
     snap: 0
   output:
-    household_health_benefits: 1_500
-    household_benefits: 1_500
+    household_health_benefits: 500
+    household_benefits: 500
 
 - name: Case 3, flag on includes annual MSP and CHIP values.
   period: 2026
@@ -35,8 +35,8 @@
     chip: 300
     snap: 0
   output:
-    household_health_benefits: 4_234.8
-    household_benefits: 4_234.8
+    household_health_benefits: 3_234.8
+    household_benefits: 3_234.8
 
 - name: Case 4, legacy wrappers do not double count canonical health values.
   period: 2026
@@ -52,8 +52,8 @@
     msp_cost: 2_434.8
     snap: 0
   output:
-    household_health_benefits: 4_234.8
-    household_benefits: 4_234.8
+    household_health_benefits: 3_234.8
+    household_benefits: 3_234.8
 
 - name: Case 5, flag on includes forced Maryland Premium Assistance value.
   # md_premium_assistance is registered in the household_health_benefits list
diff --git a/policyengine_us/tests/policy/baseline/household/household_net_income_including_health_benefits.yaml b/policyengine_us/tests/policy/baseline/household/household_net_income_including_health_benefits.yaml
index 3106c50c673..462e56f3035 100644
--- a/policyengine_us/tests/policy/baseline/household/household_net_income_including_health_benefits.yaml
+++ b/policyengine_us/tests/policy/baseline/household/household_net_income_including_health_benefits.yaml
@@ -21,3 +21,12 @@
     healthcare_benefit_value: 2_000
   output:
     household_net_income_including_health_benefits: 4_000
+
+- name: The premium tax credit, in both net income and health benefits, counts once
+  period: 2026
+  input:
+    household_net_income: 3_000
+    healthcare_benefit_value: 1_500
+    premium_tax_credit_in_force: 1_000
+  output:
+    household_net_income_including_health_benefits: 3_000 + 1_500 - 1_000
diff --git a/policyengine_us/tests/policy/baseline/household/income/household/household_health_costs.yaml b/policyengine_us/tests/policy/baseline/household/income/household/household_health_costs.yaml
index 32a7b5f3bcc..7f51040fea0 100644
--- a/policyengine_us/tests/policy/baseline/household/income/household/household_health_costs.yaml
+++ b/policyengine_us/tests/policy/baseline/household/income/household/household_health_costs.yaml
@@ -14,16 +14,27 @@
   output:
     household_health_costs: 360
 
-- name: Household health costs include Marketplace net premium when health benefits are included in net income.
+- name: Household health costs include the whole Marketplace premium when health benefits are included in net income.
   period: 2024
   input:
     gov.simulation.include_health_benefits_in_net_income: true
     chip_premium: 360
-    marketplace_net_premium: 2_000
+    selected_marketplace_plan_premium_proxy: 2_000
   output:
     household_health_costs: 2_360
 
-- name: Household health costs include computed unsubsidized Marketplace net premium.
+- name: The premium tax credit doesn't lower household health costs, since net income counts it as a refundable credit.
+  period: 2026
+  input:
+    gov.simulation.include_health_benefits_in_net_income: true
+    chip_premium: 0
+    selected_marketplace_plan_premium_proxy: 5_000
+    aca_ptc: 1_000
+  output:
+    marketplace_net_premium: 4_000
+    household_health_costs: 5_000
+
+- name: Household health costs include a computed unsubsidized Marketplace premium.
   absolute_error_margin: 0.01
   period: 2026
   input:
diff --git a/policyengine_us/tests/policy/baseline/household/income/household/household_net_income.yaml b/policyengine_us/tests/policy/baseline/household/income/household/household_net_income.yaml
index ea555b85a89..611ae4f1c87 100644
--- a/policyengine_us/tests/policy/baseline/household/income/household/household_net_income.yaml
+++ b/policyengine_us/tests/policy/baseline/household/income/household/household_net_income.yaml
@@ -184,3 +184,104 @@
   output:
     spm_unit_net_income: 500_000 + 1_000 + 200
     household_net_income: 500_000 + 1_000 + 200
+
+- name: Household net income counts the premium tax credit as a refundable tax credit.
+  period: 2026
+  input:
+    household_market_income: 30_000
+    household_benefits: 0
+    income_tax_refundable_credits_in_force: 0
+    household_refundable_state_tax_credits: 0
+    household_refundable_local_tax_credits: 0
+    used_aca_ptc: 4_000
+    household_tax_before_refundable_credits: 2_000
+    household_health_costs: 0
+  output:
+    household_tax: 2_000 - 4_000
+    household_net_income: 30_000 + 4_000 - 2_000
+
+# With health benefits counted, health costs subtract the whole Marketplace
+# premium, so a credit that is $1,000 larger raises net income by $1,000, not
+# $2,000 (once as a refundable credit and again through a smaller net premium).
+- name: With health benefits counted, a $1,000 premium tax credit against a $5,000 premium.
+  period: 2026
+  input:
+    gov.simulation.include_health_benefits_in_net_income: true
+    household_market_income: 30_000
+    household_benefits: 0
+    income_tax_refundable_credits_in_force: 0
+    household_refundable_state_tax_credits: 0
+    household_refundable_local_tax_credits: 0
+    household_tax_before_refundable_credits: 2_000
+    chip_premium: 0
+    selected_marketplace_plan_premium_proxy: 5_000
+    aca_ptc: 1_000
+  output:
+    premium_tax_credit_in_force: 1_000
+    household_health_costs: 5_000
+    household_net_income: 30_000 + 1_000 - 2_000 - 5_000
+
+- name: With health benefits counted, a $2,000 premium tax credit against the same premium.
+  period: 2026
+  input:
+    gov.simulation.include_health_benefits_in_net_income: true
+    household_market_income: 30_000
+    household_benefits: 0
+    income_tax_refundable_credits_in_force: 0
+    household_refundable_state_tax_credits: 0
+    household_refundable_local_tax_credits: 0
+    household_tax_before_refundable_credits: 2_000
+    chip_premium: 0
+    selected_marketplace_plan_premium_proxy: 5_000
+    aca_ptc: 2_000
+  output:
+    premium_tax_credit_in_force: 2_000
+    household_health_costs: 5_000
+    household_net_income: 30_000 + 2_000 - 2_000 - 5_000
+
+# A single Texas adult aged 40 in 2025 (the 2017 cliffs analysis household,
+# PolicyEngine/us-cliffs-2017 scripts/ptc_household.py), with health benefits
+# counted. A $1,000 raise cuts the premium tax credit by $94, and net income
+# rises by $709.50 with or without health benefits counted (31,840.09 to
+# 32,549.59 without): the cut counts once.
+- name: With health benefits counted, a Texas adult earning $30,000 in 2025.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    gov.simulation.include_health_benefits_in_net_income: true
+    people:
+      person1:
+        age: 40
+        employment_income: 30_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: TX
+  output:
+    premium_tax_credit_in_force: 5_606.58
+    household_health_costs: 6_194.58
+    household_net_income: 25_645.50
+
+- name: With health benefits counted, the same adult earning $31,000.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    gov.simulation.include_health_benefits_in_net_income: true
+    people:
+      person1:
+        age: 40
+        employment_income: 31_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: TX
+  output:
+    premium_tax_credit_in_force: 5_512.58
+    household_health_costs: 6_194.58
+    household_net_income: 25_645.50 + 709.50
diff --git a/policyengine_us/tests/policy/baseline/household/income/household/household_refundable_tax_credits.yaml b/policyengine_us/tests/policy/baseline/household/income/household/household_refundable_tax_credits.yaml
new file mode 100644
index 00000000000..434b26458d4
--- /dev/null
+++ b/policyengine_us/tests/policy/baseline/household/income/household/household_refundable_tax_credits.yaml
@@ -0,0 +1,65 @@
+- name: Case 1, the premium tax credit counts as a refundable tax credit.
+  period: 2026
+  absolute_error_margin: 0.01
+  input:
+    used_aca_ptc: 1_000
+    income_tax_refundable_credits_in_force: 0
+    household_refundable_state_tax_credits: 0
+    household_refundable_local_tax_credits: 0
+  output:
+    household_refundable_tax_credits: 1_000
+
+- name: Case 2, it counts once whether or not health benefits count in net income.
+  period: 2026
+  absolute_error_margin: 0.01
+  input:
+    gov.simulation.include_health_benefits_in_net_income: true
+    used_aca_ptc: 1_000
+    medicaid_cost: 500
+    snap: 0
+    income_tax_refundable_credits_in_force: 0
+    household_refundable_state_tax_credits: 0
+    household_refundable_local_tax_credits: 0
+  output:
+    household_refundable_tax_credits: 1_000
+    # The health benefits are Medicaid alone.
+    household_health_benefits: 500
+
+- name: Case 3, the credit counted is limited to the premium of the plan the household enrolls in.
+  # 26 U.S.C. 36B(b)(2): a $1,000 credit against an $800 plan counts $800.
+  period: 2026
+  absolute_error_margin: 0.01
+  input:
+    aca_ptc: 1_000
+    selected_marketplace_plan_premium_proxy: 800
+    income_tax_refundable_credits_in_force: 0
+    household_refundable_state_tax_credits: 0
+    household_refundable_local_tax_credits: 0
+  output:
+    used_aca_ptc: 800
+    premium_tax_credit_in_force: 800
+    household_refundable_tax_credits: 800
+
+- name: Case 4, a marketplace enrollee's credit reaches the household's refundable credits.
+  # A single 45-year-old in Lebanon County, PA, earning $40,000 (256% of the
+  # 2025 poverty guideline, which 2026 credits use). The credit is the
+  # benchmark premium minus the required contribution; at this income there
+  # is no EITC, refundable CTC or Pennsylvania refundable credit.
+  period: 2026
+  absolute_error_margin: 1
+  input:
+    people:
+      person1:
+        age: 45
+        employment_income: 40_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: PA
+        county: LEBANON_COUNTY_PA
+  output:
+    assigned_aca_ptc: 10_086
+    household_refundable_tax_credits: 10_086
diff --git a/policyengine_us/tests/policy/baseline/household/marginal_tax_rate.yaml b/policyengine_us/tests/policy/baseline/household/marginal_tax_rate.yaml
index a3bbd71491e..bd23acb269c 100644
--- a/policyengine_us/tests/policy/baseline/household/marginal_tax_rate.yaml
+++ b/policyengine_us/tests/policy/baseline/household/marginal_tax_rate.yaml
@@ -103,15 +103,20 @@
   period: 2024
   input:
     people:
+      # Each has employer coverage, so no premium tax credit phases out
+      # with a raise.
       person1:
         age: 40
         employment_income: 90_000
+        has_esi: true
       person2:
         age: 35
         employment_income: 60_000
+        has_esi: true
       person3:
         age: 30
         employment_income: 30_000
+        has_esi: true
     tax_units:
       tax_unit1:
         members: [person1]
@@ -136,6 +141,28 @@
     federal_marginal_tax_rate: [0.22, 0.12, 0]
     fica_marginal_tax_rate: [0.0765, 0.0765, 0]
 
+- name: A marketplace enrollee's rate includes the premium tax credit's phase-out
+  # A single 35-year-old in Texas earning $60,000 in 2024: 411% of the 2023
+  # poverty guideline, where the enhanced schedule caps the benchmark plan at
+  # 8.5% of income, so the credit falls by 8.5 cents per added dollar.
+  # 12% bracket + 7.65% payroll tax + 8.5% = 28.15%.
+  absolute_error_margin: 0.0001
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 35
+        employment_income: 60_000
+    tax_units:
+      tax_unit1:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: TX
+  output:
+    marginal_tax_rate: 0.2815
+
 # A single Ohio parent of children aged 4 and 8. The marginal tax rate must
 # equal the change in household net income between the two fresh simulations
 # above it: 1 - (alt - base) / 1_000. Ohio Works First counts
diff --git a/policyengine_us/tests/policy/contrib/federal/abolish_payroll_tax.yaml b/policyengine_us/tests/policy/contrib/federal/abolish_payroll_tax.yaml
index bee6ad3084c..cc9a8d2a06a 100644
--- a/policyengine_us/tests/policy/contrib/federal/abolish_payroll_tax.yaml
+++ b/policyengine_us/tests/policy/contrib/federal/abolish_payroll_tax.yaml
@@ -30,6 +30,7 @@
 
 - name: Abolishing payroll tax keeps the Idaho permanent building fund tax
   period: 2025
+  absolute_error_margin: 0.01
   input:
     gov.contrib.ubi_center.flat_tax.abolish_payroll_tax: true
     state_code: ID
@@ -45,8 +46,10 @@
     id_pbf: 10
     household_state_tax_before_refundable_credits: 2_010
     household_tax_before_refundable_credits: 7_010  # 5,000 + 2,000 + 10
-    household_refundable_tax_credits: 900
-    household_net_income: 53_890  # 60,000 + 900 - 7,010
+    # The federal income tax stays, and so does the premium tax credit.
+    premium_tax_credit_in_force: 122.23
+    household_refundable_tax_credits: 800 + 100 + 122.23
+    household_net_income: 53_890 + 122.23  # 60,000 + 900 + 122.23 - 7,010
 
 - name: Abolishing payroll tax keeps North Carolina use tax
   period: 2025
diff --git a/policyengine_us/tests/test_aggregate_list_integrity.py b/policyengine_us/tests/test_aggregate_list_integrity.py
index 2599fa64000..747de736ff7 100644
--- a/policyengine_us/tests/test_aggregate_list_integrity.py
+++ b/policyengine_us/tests/test_aggregate_list_integrity.py
@@ -326,6 +326,7 @@ def test_reform_aggregates_keep_shared_cash_programs(
     "local_occupational_tax",
     "household_refundable_tax_credits",
     "income_tax_refundable_credits_in_force",
+    "premium_tax_credit_in_force",
     "federal_income_tax_in_force",
     "household_refundable_state_tax_credits",
     "household_refundable_local_tax_credits",
diff --git a/policyengine_us/tests/test_household_spm_resource_parity.py b/policyengine_us/tests/test_household_spm_resource_parity.py
index b3d554e469a..84eb058ad20 100644
--- a/policyengine_us/tests/test_household_spm_resource_parity.py
+++ b/policyengine_us/tests/test_household_spm_resource_parity.py
@@ -449,8 +449,10 @@ def test_net_incomes_reconcile_for_one_person(state, earnings):
 
     spm_unit_net_income subtracts work, medical and child support costs, and it
     leaves out health benefits. household_net_income subtracts health costs and
-    counts the benefits and bill discounts listed in HOUSEHOLD_ONLY. Take those
-    away and the two totals agree.
+    counts the benefits and bill discounts listed in HOUSEHOLD_ONLY, and the
+    premium tax credit as a refundable tax credit; the SPM counts the credit
+    through lower medical out-of-pocket spending, which spm_side adds back.
+    Take those away and the two totals agree.
     """
     year = 2026
     # Rent makes New Jersey's relief positive, so that payment is under test too.
@@ -470,6 +472,7 @@ def value(name):
         - value("commodity_supplemental_food_program")
         - value("household_head_start_benefits")
         - value("housing_assistance")
+        - value("premium_tax_credit_in_force")
     )
     spm_side = (
         value("spm_unit_net_income")
diff --git a/policyengine_us/tests/unit/test_ss_cola_means_test.py b/policyengine_us/tests/unit/test_ss_cola_means_test.py
index e43f3dafbbf..e07b326ae37 100644
--- a/policyengine_us/tests/unit/test_ss_cola_means_test.py
+++ b/policyengine_us/tests/unit/test_ss_cola_means_test.py
@@ -1151,9 +1151,12 @@ def test_means_test_off_preserves_downstream_dependency_closure(
         for component in COMPONENTS:
             record[f"social_security_{component}"] = {2027: 6_000}
             record.pop(f"social_security_{component}_reported")
+    # Employer coverage keeps the worker off the premium tax credit, which
+    # household net income counts since main supplied these literals.
     record.update(
         employment_income={2027: 10_000},
         taxable_interest_income={2027: 20_000},
+        has_esi={2027: True},
     )
     situation = _situation({"worker": record})
     situation["households"]["worker"]["state_code"] = {2027: "NY"}
diff --git a/policyengine_us/variables/gov/aca/eligibility/aca_magi_fraction.py b/policyengine_us/variables/gov/aca/eligibility/aca_magi_fraction.py
index 9464de7bdd2..f361e2e80c5 100644
--- a/policyengine_us/variables/gov/aca/eligibility/aca_magi_fraction.py
+++ b/policyengine_us/variables/gov/aca/eligibility/aca_magi_fraction.py
@@ -1,4 +1,5 @@
 from policyengine_us.model_api import *
+from policyengine_us.tools.parameters import FIRST_MODELED_YEAR
 
 
 class aca_magi_fraction(Variable):
@@ -24,5 +25,12 @@ class aca_magi_fraction(Variable):
 
     def formula(tax_unit, period, parameters):
         magi = max_(0, tax_unit("aca_magi", period))
-        fpg = tax_unit("tax_unit_fpg", period.last_year)
+        # The credit measures income against the guideline for the year before
+        # the coverage year. For coverage in the first modeled year, that year
+        # precedes the model, so the coverage year's guideline stands in and
+        # nothing is computed for an unmodeled year.
+        guideline_period = period.last_year
+        if guideline_period.start.year < FIRST_MODELED_YEAR:
+            guideline_period = period
+        fpg = tax_unit("tax_unit_fpg", guideline_period)
         return np.floor(100 * magi / fpg) / 100
diff --git a/policyengine_us/variables/household/household_net_income_including_health_benefits.py b/policyengine_us/variables/household/household_net_income_including_health_benefits.py
index 4f4ab385316..2c6a3044e46 100644
--- a/policyengine_us/variables/household/household_net_income_including_health_benefits.py
+++ b/policyengine_us/variables/household/household_net_income_including_health_benefits.py
@@ -8,3 +8,6 @@ class household_net_income_including_health_benefits(Variable):
     definition_period = YEAR
     unit = USD
     adds = ["household_net_income", "healthcare_benefit_value"]
+    # household_net_income already counts the premium tax credit, as a
+    # refundable tax credit, and healthcare_benefit_value counts it too.
+    subtracts = ["premium_tax_credit_in_force"]
diff --git a/policyengine_us/variables/household/income/household/household_refundable_tax_credits.py b/policyengine_us/variables/household/income/household/household_refundable_tax_credits.py
index 0a0911e4f8e..b7587568790 100644
--- a/policyengine_us/variables/household/income/household/household_refundable_tax_credits.py
+++ b/policyengine_us/variables/household/income/household/household_refundable_tax_credits.py
@@ -9,6 +9,11 @@ class household_refundable_tax_credits(Variable):
     unit = USD
     adds = [
         "income_tax_refundable_credits_in_force",
+        # The premium tax credit is a refundable credit (26 U.S.C. 36B), but
+        # mostly paid in advance to the insurer, with the return reconciling
+        # the difference. It counts here rather than in income_tax, which
+        # stays what the return shows and what SPM resources net.
+        "premium_tax_credit_in_force",
         "household_refundable_state_tax_credits",
         "household_refundable_local_tax_credits",
     ]
diff --git a/policyengine_us/variables/household/income/tax_unit/premium_tax_credit_in_force.py b/policyengine_us/variables/household/income/tax_unit/premium_tax_credit_in_force.py
new file mode 100644
index 00000000000..d6860c572ff
--- /dev/null
+++ b/policyengine_us/variables/household/income/tax_unit/premium_tax_credit_in_force.py
@@ -0,0 +1,20 @@
+from policyengine_us.model_api import *
+
+
+class premium_tax_credit_in_force(Variable):
+    value_type = float
+    entity = TaxUnit
+    label = "premium tax credit counted in household net income"
+    documentation = (
+        "The premium tax credit, a refundable federal income tax credit "
+        "(26 U.S.C. 36B), as household net income counts it: the credit the "
+        "tax unit uses, which 36B(b)(2) limits to the premiums of the plan "
+        "it enrolls in and which is zero for a tax unit that doesn't enroll. "
+        "Like the other federal refundable credits, it is zero in a year the "
+        "federal income tax is abolished."
+    )
+    definition_period = YEAR
+    unit = USD
+    reference = "https://www.law.cornell.edu/uscode/text/26/36B#b_2"
+    defined_for = "federal_income_tax_in_force"
+    adds = ["used_aca_ptc"]