IRS Announces Increases to ACA Employer Mandate Penalty for 2025

For 2025, the ACA affordability threshold was increased from 8.39% to 9.02%–meaning that employer-sponsored coverage will only be deemed affordable if the employee’s required contribution for self-only coverage does not exceed 9.02% of the employee’s household income. Now, the IRS has announced a decrease in the penalties that can be assessed in 2025 if the employer fails to offer affordable coverage to at least 95% of its full-time employees (and dependents) and at least one employee receives a premium tax credit. The penalties under IRC Section 4980H(a) were decreased to $2,900 in 2025. The penalties under IRC Section 4980H(b) were decreased to $4,350. That means the monthly penalties for 2025 will be equal to $241.67 and $362.50. For more information on the employer mandate penalties, visit Tax Facts Online. Read More: Link to Q469.