Updated November 4, 2026. Quick answer: Worksheet Y in Publication 974 (2025) redoes the household income and repayment limitation steps of Worksheet X when you claim one of four listed deductions or exclusions, such as the student loan interest deduction or the exclusion of savings bond interest. It subtracts the deduction from household income, reruns the 200, 300 and 400 percent ladder, and ends at line 22, the health insurance deduction to use when you repeat the calculation method.
Pub 974 worksheet walk-throughs: Pub 974 Step 3 and Step 5 Worksheets.
When Worksheet Y applies
The publication lists the four triggers: “Passive activity losses from rental real estate activities and lines 1d and 3 of Form 8582 are losses.” “IRA deduction and you (or your spouse if filing a joint return) were covered by a retirement plan at work or through self-employment.” “Exclusion of interest from series EE and I U.S. savings bonds issued after 1989.” “Student loan interest deduction.” The routing rule is “If you completed Worksheet X, complete Worksheet Y and follow the instructions under line 22 of that worksheet.” Without Worksheet X, the publication has you repeat the calculation method instead. Household income itself is defined in the Form 8962 instructions: “household income is the modified adjusted gross income (modified AGI) of you and your spouse (if filing a joint return)”.
The order of the deductions
The first pass is done without them: “The first time you complete the Iterative Calculation Method or Simplified Calculation Method, you do so without including any of the deductions/exclusions listed above in AGI, modified AGI, or household income.” Then the order is fixed: “If you are claiming more than one deduction/exclusion on the list, you must figure the deductions/exclusions in the order shown in the list.” Worksheet Y takes the first one, and Worksheet Z each one after it. Related forms: Form 8815 for the bond interest exclusion and the student loan interest worksheet.
Lines 1 to 14, the ladder again
| Line | What it asks |
|---|---|
| 1 | “Enter the amount from Worksheet X, line 14” |
| 2 | “Enter the deduction or exclusion” |
| 3 | “Revised household income. Subtract line 2 from line 1” |
| 4 | “Enter the smaller of Worksheet W, line 19, or $750 ($375 if your filing status is single)” |
| 5 | “Subtract line 4 from line 3. If zero or less, enter -0-” |
| 6 | “Enter the amount from Worksheet X, line 17b” |
| 7 | “Divide line 5 by line 6.” Under 200 means “enter $750 ($375 if your filing status is single) on line 14” |
| 8 to 10 | “Enter the smaller of Worksheet W, line 19, or $1,950 ($975 if your filing status is single)”, subtract it from line 3, and divide by line 6; under 300 means “enter $1,950 ($975 if your filing status is single) on line 14” |
| 11 to 13 | “Enter the smaller of Worksheet W, line 19, or $3,250 ($1,625 if your filing status is single)”, subtract it from line 3, and divide by line 6; under 400 means “enter $3,250 ($1,625 if your filing status is single) on line 14”, while 400 or more means “enter the amount from Worksheet W, line 2, on line 14” |
| 14 | “Enter the amount you were instructed to enter here by line 7, 10, or 13.” |
The no-rounding rule of Worksheet X applies here too: “If the result is not a whole percentage, do not round; instead, multiply this number by 100 (to express it as a percentage) and then drop any numbers after the decimal point.”
Lines 15 to 22, back to the deduction
| Line | What it asks |
|---|---|
| 15 | “Enter the amount from Worksheet X, line 6” |
| 16 | “Add lines 14 and 15” |
| 17 | “Enter the amount from Worksheet X, line 27” |
| 18 | “Enter the smaller of line 16 or line 17” |
| 19 | “Enter the amount from Worksheet X, line 29” |
| 20 | “Enter the smaller of line 18 or line 19” |
| 21 | “Enter the amount from Worksheet X, line 5” |
| 22 | “Add lines 20 and 21.” |
Line 14 is also carried to the credit form: “Also, enter this amount on line 28 of the Form 8962 you attach to your tax return if you are required to complete that line and you do not complete Worksheet Z.” After line 22 the publication says “Repeat the Iterative Calculation Method or Simplified Calculation Method, whichever applies.” Use line 22 as the self-employed health insurance deduction in Step 1, and use line 2 in any step that needs AGI, modified AGI or household income.
Example with invented numbers, building on Carla
Computed illustration, not an IRS example. Her household income is $100,675; suppose she also excludes an invented $2,500 of Series EE bond interest. The starting figures are on the Worksheet X page.
| Line | Entry | Amount |
|---|---|---|
| 1 | Worksheet X line 14 (Carla’s household income) | $100,675 |
| 2 | The deduction or exclusion: invented $2,500 of Series EE or I bond interest excluded | $2,500 |
| 3 | Revised household income, line 1 minus line 2 (computed) | $98,175 |
| 4 | Smaller of Worksheet W line 19 ($16,581) or $750 (computed) | $750 |
| 5 | Line 3 minus line 4 (computed) | $97,425 |
| 6 | Worksheet X line 17b | $31,200 |
| 7 | Line 5 divided by line 6, decimals dropped (computed) | 312% |
| 8 | Smaller of W line 19 or $1,950 (computed) | $1,950 |
| 9 | Line 3 minus line 8 (computed) | $96,225 |
| 10 | Line 9 divided by line 6, decimals dropped (computed) | 308% |
| 11 | Smaller of W line 19 or $3,250 (computed) | $3,250 |
| 12 | Line 3 minus line 11 (computed) | $94,925 |
| 13 | Line 12 divided by line 6, decimals dropped (computed) | 304% |
| 14 | Under 400, so the $3,250 amount | $3,250 |
| 15 | Worksheet X line 6 | $8,800 |
| 16 | Lines 14 and 15 added (computed) | $12,050 |
| 17 | Worksheet X line 27 | $13,000 |
| 18 | Smaller of line 16 or line 17 (computed) | $12,050 |
| 19 | Worksheet X line 29 | $25,381 |
| 20 | Smaller of line 18 or line 19 (computed) | $12,050 |
| 21 | Worksheet X line 5 (blank, so zero) | 0 |
| 22 | Lines 20 and 21 added (computed) | $12,050 |
Every percentage stays under 400, so line 14 is the $3,250 amount, the same as before: $98,175 of revised household income is still above 300 percent of the poverty line, so the limitation does not move. Line 22 is $12,050, the same self-employed health insurance deduction as Worksheet X line 31. Whether it moves depends on the family’s size and income, which is why the sheet is rerun for each listed item.
Edition
This page reads Publication 974 (2025), Premium Tax Credit (PTC), the file irs.gov served on 2026-11-04 (sha256 in the kit data). Line numbers and letters belong to that edition, so check the label printed on the worksheet in your own copy before you follow a line reference.
Common mistakes
- Using Worksheet Y when Worksheet X was not completed. Without it the publication has you repeat the calculation method with the deduction in AGI.
- Taking the listed items out of order. The publication fixes the order, and the bond interest exclusion comes before the student loan interest deduction.
- Rounding line 7, 10 or 13 up. The decimals are dropped.
- Entering the line 2 amount twice when Worksheet Z is also needed. Each deduction or exclusion gets its own sheet.
Related: student loan interest worksheet, Form 8815, and Schedule 1 line 20.
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Answer againSources
- Publication 974 (2025), Premium Tax Credit (PTC): https://www.irs.gov/pub/irs-pdf/p974.pdf
- Instructions for Form 8962 (2025), Premium Tax Credit (PTC): https://www.irs.gov/pub/irs-pdf/i8962.pdf
Read from the IRS documents linked above on November 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.