Barista FIRE — part-time wages + ACA subsidy feedback
Part-time work covers some of your spending, so the portfolio you need shrinks — but the wages raise your MAGI, and MAGI drives the ACA premium tax credit. This projection solves that loop as a fixed point under 2026 law, where the enhanced credits have expired and the 400% FPL cliff is back: one dollar of MAGI over the line forfeits the whole credit. Part-time W-2 taxes and account-type gross-up are in the math, and the answer is always a range.
Legislative uncertainty — 2026 subsidies are a moving target
The enhanced (ARPA/IRA) premium tax credit expired 2025-12-31, restoring the original §36B schedule — including the 400% FPL cliff — for 2026. The US House passed a three-year extension on 2026-01-08, but the Senate has not. If an extension becomes law retroactively, the cliff would disappear and every subsidy figure here would change. Treat all 2026 credit amounts as projections under current law, not settled numbers.
Required portfolio range
low · typical · highCoral = low bound (withdrawal rate +0.5pp), green = typical at your rate, lime = high bound (rate −0.5pp). A withdrawal-rate sensitivity band, not market percentiles.
The 2026 ACA cliff, live
net premium vs MAGI · 400% FPL markerNet annual premium as MAGI rises. The vertical jump is the 400% FPL cliff: one dollar past it forfeits the entire projected credit.
Show the math ›
Assumptions & sources ›
| Assumption | Value | Source · asOf |
|---|---|---|
| Poverty guideline (FPL) | 2025 guidelines, 48 states + DC | HHS ASPE · asOf 2025-01 · applies to coverage year 2026 per IRC §36B(d)(3)(B); Alaska/Hawaii use higher lines not modeled |
| Applicable percentage | 2.10%–9.96% of MAGI, 400% cliff | IRS Rev. Proc. 2025-25 · asOf 2025-07 · post-enhancement schedule; linear interpolation within brackets |
| Benchmark (SLCSP) premium | $625/mo national average, age 40 | KFF marketplace benchmark averages · asOf 2026-01 · rescaled by the CMS default age curve (21→1.0, 40→1.278, 64→3.0); illustrative — the real SLCSP varies by rating area |
| Federal brackets + deduction | 2026 tables, single / MFJ | IRS Rev. Proc. 2025-32 · asOf 2025-10 · standard deduction only; no credits or itemizing |
| LTCG stacking | 0/15/20% above ordinary income | IRS Rev. Proc. 2025-32 §2.03 · asOf 2025-10 · taxable-account gains stack on top of wages |
| FICA | 6.2% + 1.45% (+0.9%) | SSA 2026 wage base $184,500 · asOf 2025-10 · employee side; wages only, never withdrawals |
| Withdrawal-rate band | typical ±0.5pp | structural sensitivity around your input — an illustration, not a sustainability claim; sequence-of-returns risk is not simulated here (v1) |
| State taxes | not modeled | federal only (v1); state income tax and state-specific subsidy programs vary widely |
Below 100% FPL the model shows zero credit — in expansion states that is Medicaid territory (to 138% FPL), which has no premium at all; in non-expansion states it can be a coverage gap. ACA MAGI also counts untaxed Social Security and tax-exempt interest, which this v1 does not model. Every subsidy figure is a projection under 2026 current law.
Common questions
What is Barista FIRE? ›
Barista FIRE is a semi-retirement where part-time work covers part of your spending, so the portfolio you need is smaller than for full FIRE. The catch modeled here is that W-2 wages raise your MAGI, and MAGI sets your ACA premium tax credit. This projection solves that loop as a fixed point, charges federal income tax and FICA on the wages, grosses up withdrawals by account type, and reports the required portfolio as a range.
What is the 400% FPL ACA subsidy cliff? ›
Under 2026 law the enhanced premium credits have expired, restoring the original schedule where premium tax credits end at 400 percent of the federal poverty level. One dollar of MAGI past that line forfeits the entire credit, a sharp discontinuity rather than a gradual taper. The page draws this cliff live, plotting net premium against MAGI so you can see the vertical jump and how much headroom your plan has.
How do Roth and Traditional withdrawals affect ACA subsidies? ›
The account you draw from changes your MAGI, which drives the credit. Traditional withdrawals count as 100 percent ordinary income and 100 percent MAGI. Taxable-account sales add only the realized-gain slice as long-term capital gain. Roth withdrawals add nothing to MAGI, so the 400 percent FPL cliff cannot see them. The calculator grosses up each type accordingly while solving the MAGI-to-subsidy loop, which shifts how close you land to the cliff.
Will the ACA subsidy cliff apply in 2026? ›
As modeled, yes, but it is unsettled. The enhanced ARPA and IRA credits expired on 2025-12-31, restoring the original section 36B schedule and the 400 percent FPL cliff for 2026. The US House passed a three-year extension on 2026-01-08, but the Senate had not, per the page. If an extension becomes law retroactively, the cliff would disappear, so treat every 2026 credit amount as a projection under current law.
Related
- Coast FIRE
Stop contributing and let compounding finish the job — the no-wage sibling.
- Guide: Coast vs Barista FIRE
Which lever — time or part-time income — moves your number more.
- Lean / Fat FIRE number
Your target across spending flavors, with the same ACA cliff applied.
- Methodology
How the MAGI→PTC fixed-point solver and data layers are built.