Implied marginal tax rates in the Affordable Care Act – a graph.

This is for a single individual, at adjusted gross incomes that fit the expected range of 133% to 400% of federal poverty level (“FPL”) in 2014.

I did these curves on a next dollar basis. I know that the act goes up in increments other than $1.

Isn’t it surprising, that you don’t just pay an additional 10% or so, for each increased amount of income. What happens instead is that the effective marginal tax rises between 133% and 150% FPL, then starts at a point lower in the 150% to 200% range, rises, then drops in 200% to 250%, all the way out to 300% to 400% FPL—where it stays a flat 9.5%.

Why did Congress do it this way? At no point do you pay less by going up a dollar. But the rate in which the premium credit declines (meaning, the more you pay for a policy) changes as you move up the income ladder. The cost of insurance to you is between $500 and $4,500; but, as you can see, the discount you are getting through the premium credit strongly tapers off in some income ranges.

[Update 12/11/12: One guess of mine is that the higher effective marginals at lower income is designed to smooth out the fact that you are also getting cost-sharing credits in those bands . . . ]

[Update 10/14/13: This is all based on second-lowest-cost Silver, of course. Your mileage may vary.]

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