The Affordable Care Act’s (ACA) health insurance marketplaces are a key source of coverage for small-business people. While most Americans get health insurance through their employer, people who own small businesses or are self-employed typically purchase insurance on their own. A new Center for American Progress analysis finds that about 5.2 million small-business owners and self-employed Americans are covered through the marketplaces. Of those, more than 4.4 million business people receive tax credits that lower their premium costs, and they will each lose an average of $1,500 in tax credits if Congress allows the enhanced premium tax credit to expire at the end of 2025.
More than 4.4 million business people receive tax credits that lower their premium costs, and they will each lose an average of $1,500 in tax credits if Congress allows the enhanced premium tax credit to expire at the end of 2025.
Overall, CAP’s analysis of the September 2025 distribution analysis from the congressional Joint Committee on Taxation (JCT) and a previous report from the U.S. Department of the Treasury finds that the enhanced premium tax credits decrease taxes for 4.4 million self-employed people by $6.7 billion, or $1,500 per affected business person, when JCT’s expected 2026 cuts are applied to the population receiving premium tax credits in 2025. For business people with taxable personal incomes less than $150,000, the enhanced premium tax credits would decrease health insurance premiums by an aggregate $5.8 billion in 2026.
In contrast, another temporary business tax program, the 199A pass-through business deduction, was also set to expire at the end of this year before it was extended in congressional Republicans’ Big Beautiful Bill (BBB). The pass-through deduction allows business owners and self-employed people to pay taxes at marginal rates 20 percent lower than that of other Americans, which primarily subsidizes the richest business owners. When faced with the expiration of this temporary policy, Senate Finance Committee Republicans claimed it must be extended because otherwise “small business owners would face massive tax hikes.” However, under this line of argument, allowing the enhanced premium tax credits to expire would cause taxes to rise by more than if the pass-through deduction had expired on schedule, for small-business people with less than $150,000 in taxable income. For those individuals, the pass-through deduction decreases taxes by only $4.5 billion, or $425 per affected business person, per analysis of a different JCT distribution analysis.
Speaker of the House Mike Johnson (R) has said he is concerned that extending the enhanced premium tax credits would be “subsidizing high-income earners.” But JCT reports that 86 percent of enhanced premium tax credit spending goes to people with incomes less than $150,000 per year, and no measurable benefit goes to people making more than $500,000. In contrast, the pass-through deduction, which Congress made permanent in the BBB, delivers nearly two-thirds of its benefits to business people with more than $500,000 in taxable income, including $20,000 per year per business person with more than $500,000 in income.
The expiration of enhanced premium tax credits would be a large blow to more than 4.4 million small businesses across the country and have additional negative effects on 5.2 million small-business people overall. Per the Treasury Department, the states where small-business people make up the largest proportion of total marketplace enrollees are, in order, Hawaii, North Dakota, the District of Columbia, Florida, Georgia, Louisiana, Nebraska, New Hampshire, and Texas. In each of those places, more than 30 percent of marketplace enrollees are small-business people.
JCT reports that 86 percent of enhanced premium tax credit spending goes to people with incomes less than $150,000 per year, and no measurable benefit goes to people making more than $500,000
With marketplace open enrollment beginning November 1, small-business people and other Americans around the country will see their premium costs spike dramatically for 2026. Small-business employees and self-employed people together account for half of all adults enrolled in marketplace coverage. If Congress fails to extend the enhanced premium tax credits, marketplace enrollment will fall, putting upward pressure on future premium rates, and about 4 million more people will be uninsured by 2034.
Methodology
This analysis compares two different distribution analyses from the Joint Committee on Taxation on the enhanced premium tax credits and pass-through deduction, which show the impact of those provisions in 2026 and 2027, respectively. Because the JCT distribution analysis of the pass-through deduction is of a slightly expanded provision and does not provide a data point for 2026, the CAP author deflated the 2027 JCT score to match JCT’s 2026 overall estimate of pass-through deduction costs, holding distribution constant at that lower overall level. The author then distributed overall premium tax credits to small-business owners and self-employed Americans in proportion to their premium tax credit usage in the Treasury Department report on 2022 and 2024 enhanced premium tax credit recipients. The author inflated enrollment numbers to match changes in total individual marketplace enrollment since 2022. From 2022 to 2025, overall enrollment has increased from 13.5 million to 23.4 million, and the percentage of overall enrollment with premium tax credits increased from 90 percent to 93 percent, per data from KFF. This product assumes that small-business enrollment in marketplace plans remains the same percentage of current enrollment, as the Treasury Department notes has been true historically. It also assumes that their utilization of marketplace premium tax credits has increased in line with overall usage, by 3 percentage points, from 82 to 85 percent.