California Has Its Own Affordable Care Act (Obamacare) Tax Penalty

 

The Affordable Care Act (Obamacare) tax penalty has been set to zero, but some states have enacted their own health insurance requirements.

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In California, you may be required to pay a state tax penalty if you don't have health insurance.

California imposes a tax penalty on residents who don't have health insurance unless they qualify for an exemption. The penalty essentially replaces the federal Affordable Care Act penalty that ended in 2019. If you owe a penalty, it will be due when you file your tax return.

What Is the Penalty for Not Having Health Insurance in California?

The formula for determining the precise penalty is complicated, but it closely tracks the former ACA penalty. In California, if you are uninsured for all of 2022 and you don't qualify for an exemption, you will owe $850 for each adult ($425 for each dependent child) OR 2.5% of your household income above California's income tax filing threshold, whichever is greater. The payment will be due when you file your taxes in 2023.

EXAMPLE

Rebecca is a single woman without health insurance who earns $50,000 in 2022. When she files her taxes in April 2023, her tax penalty will be $936. That's because $50,000 minus her $12,550 filing threshold equals $37,450. Two-and-one-half percent of $37,450 is $936.25. Because that amount is greater than $850, she owes $936.

If you are uninsured for fewer than 12 months of the year, you can calculate the penalty by determining 1/12 of the full penalty amount and then multiplying that by the number of months you were uninsured. (But if you are uninsured for no more than three consecutive months, you are exempt from the penalty altogether. See below for more information about exemptions.)

EXAMPLE

Returning to Rebecca's situation above, let's say she is uninsured for just seven months in 2021. She divides her full penalty amount of $936 by 12, which equals $78. Then she multiplies $79 by seven to get her total penalty amount of $546.

Learn More

The California Franchise Tax Board offers a penalty calculator you can use to estimate what you might owe if you are uninsured and don't qualify for an exemption.

To learn about what qualifies as health coverage under Obamacare and whether you are exempt, see Do I Have to Get Obamacare in California?


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Jurisdictional relevance: ST

There are versions of this article for each State.



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