Dependent Income Exclusion Act of 2025

Dependent Income Exclusion Act of 2025 amends the tax code to exclude certain dependent earnings from the calculation of modified adjusted gross income (MAGI) when determining eligibility for premium tax credits (PTCs) used to help people purchase health insurance through the ACA marketplaces. Specifically, wages or net earnings of certain dependents may be ignored for MAGI calculations if the dependent meets age and program requirements (under 18, or under 24 and in a qualifying job-training or apprenticeship program). The exclusion is capped at 15% of the taxpayer’s MAGI and includes a Medicaid-related safeguard in non-expansion states to prevent household income from falling below the poverty line. The bill also adds reporting requirements and makes conforming amendments to related ACA and tax provisions. The changes take effect for tax years after enactment and for advance PTC payments accordingly.