Treasury and IRS Propose Rules Restricting Premium Tax Credits to Eligible Americans

The Treasury Department and IRS on Wednesday issued proposed rules implementing Working Families Tax Cuts reforms to the Premium Tax Credit, the refundable subsidy that helps eligible taxpayers afford exchange health insurance.

“Hardworking American taxpayers should not be forced to subsidize health care for people who are ineligible under federal law,” Bessent said. The rules strengthen eligibility standards, close verification gaps, and restrict the credit to Americans who qualify under federal law. Beginning in 2027, taxpayer-funded subsidies would go only to U.S. citizens, U.S. nationals, and certain lawfully present noncitizens.

IRS leadership noted that the enhanced checks are designed to curb improper claims. CMS Administrator Dr. Mehmet Oz has previously tied similar integrity measures to preventing waste. The proposal follows earlier Treasury action limiting refundable portions of other credits (child tax credit, earned-income credit, and others) to citizens, nationals, and qualified aliens.

Officials framed the change as part of a broader effort to restore integrity to the tax code and health system while lowering costs for eligible Americans. Parallel HHS regulations are expected to address exchange operational changes.

The rules are proposed and subject to public comment before finalization. They mark another concrete step by the Trump administration to ensure federal benefits follow statutory eligibility limits.