Are employer-paid health insurance premiums included in my gross income for tax credit eligibility?

Good news! Employer-paid health insurance premiums are generally NOT included in your gross income. This is one of the biggest tax advantages of employer-sponsored health plans. These premiums are considered a tax-free benefit, which means they don't appear on your W-2 as taxable wages and aren't part of your gross income calculation for determining AGI. So in your case, if your salary is $73,500, that's what you'd use for calculating your eligibility for the tax credit (plus any other income sources like interest, dividends, etc.), but not the $7,200 your employer pays for your health insurance. There are some exceptions, like if you have a Section 125 Cafeteria Plan where you explicitly chose to receive cash instead of health benefits, or for certain S-corporation shareholders. But for most regular employees, employer-paid premiums are excluded from gross income.

After struggling with this exact same question last year (and getting different answers from two tax preparers!), I found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure it out. It actually analyzes tax documents and IRS publications to give you specific answers. I uploaded my W-2 and benefits summary, and it immediately clarified that employer-paid health insurance isn't counted in gross income. It even showed me the exact sections of the tax code that applied to my situation. Way better than trying to decipher IRS language on my own! Seriously made understanding my tax situation so much easier.

Just wanted to follow up about that taxr.ai site mentioned earlier. I was the skeptical one, but I decided to try it out after getting frustrated with conflicting info online. I have to admit, I was impressed. I uploaded my benefits statements and asked specifically about employer health premiums and AGI calculations, and it pulled up the exact IRS guidance with explanations in plain English. What I really liked was how it explained the difference between gross income and AGI, showing exactly where employer health benefits fit in the calculation. Saved me from potentially missing out on a credit I actually qualified for. Definitely bookmarking this for future tax questions.

If you're still having trouble figuring this out or want confirmation directly from the IRS, good luck getting through to them on the phone! I spent HOURS on hold last year trying to get a straight answer about a similar issue. Then I found this service called Claimyr (https://claimyr.com) that actually got me through to a real IRS agent in about 15 minutes instead of waiting for hours or days. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was able to ask directly about employer-paid health premiums and AGI calculations, and the agent confirmed they aren't included in gross income. Having that official confirmation gave me peace of mind when claiming my tax credit.

I need to eat some humble pie here. After my skeptical comment yesterday, I decided to try that Claimyr service as a last resort. I was absolutely SHOCKED when I got a call back in about 20 minutes with an actual IRS agent on the line. The agent confirmed exactly what others here have said - employer-paid health insurance premiums are NOT included in gross income for tax purposes. I was able to get answers to several other questions I had been trying to resolve for weeks. The relief of finally getting clear answers from an official source was worth every penny. Sometimes you have to admit when you're wrong, and I was definitely wrong about this service!

Just to add another perspective - I'm an HR benefits coordinator, and this question comes up all the time. Here's a simple way to check: look at your W-2 form, specifically Box 12. If there's a code DD with an amount, that represents the cost of employer-sponsored health coverage. This amount is reported for informational purposes only and is not taxable. The fact that it's reported separately with code DD confirms that it's not part of your taxable wages in Box 1, which is what you'd use for calculating your AGI.

Does anyone know how this works with HSA contributions? My employer contributes $1500 to my HSA annually on top of paying part of my health insurance premium.

As someone who just went through this same confusion last month, I can confirm what others have said - employer-paid health insurance premiums are NOT included in your gross income. I was in a similar situation where I was right at the edge of a tax credit threshold. What really helped me was looking at my pay stub vs. my W-2. My gross pay on my final pay stub was higher than Box 1 on my W-2 because Box 1 already excludes pre-tax deductions like health insurance premiums I pay, while employer-paid portions never show up as income at all. The IRS treats employer-paid health benefits as a tax-free fringe benefit under Section 106 of the tax code. So your $73,500 salary is what counts toward your AGI calculation - not the additional $7,200 your employer pays for insurance. You should be comfortably under the $75,000 threshold for your tax credit!