State Tax Penalty for No Health Insurance: Costs and Exemptions

Only five states and the District of Columbia charge a state tax penalty for no health insurance: California, Massachusetts, New Jersey, Rhode Island, and DC. Vermont requires residents to report coverage but attaches no fine.¹ Everywhere else, going without coverage costs you nothing at tax time, because the federal penalty dropped to $0 starting in 2019.²

How much you owe depends on where you live, your income, how many people are in your household, and how many months you were uninsured. The rest of this article walks through the numbers for the 2025 tax year, which you’ll file in spring 2026.

California

California charges the greater of a flat dollar amount or 2.5% of household income above the filing threshold. The flat figures are $950 per uninsured adult and $450 per uninsured child under 18, with a family maximum of $2,850 under the flat method. The penalty is capped at the statewide average cost of a Bronze plan: $4,524 for a single person, scaling up to $22,620 for households of five or more.³

A family of four with two adults and two children under 18 that went uninsured all year would owe at least $2,800 under the flat method.⁴ Higher earners pay more because the 2.5% calculation overtakes the flat amount once income climbs far enough above the filing threshold.

New Jersey

New Jersey’s structure mirrors California’s. For 2025, the minimum penalty for an individual is $695 and the maximum is $4,908. A family with two adults and three dependents faces a minimum between $2,433 and $2,443 depending on income, with a maximum reaching $24,540 for households earning above $400,000.⁵ Like California, the total is capped at the statewide average Bronze plan premium.

Rhode Island

Rhode Island charges $57.92 per month per uninsured adult and $28.96 per month per uninsured child under 18, or 2.5% of household income above the filing threshold, whichever is greater. The annual Bronze plan cap runs from $4,284 for a single person to $21,420 for households of five or more.⁶

District of Columbia

DC uses the original federal formula, frozen at its December 15, 2017 values: $695 per uninsured adult (half that for children), or 2.5% of income above the filing threshold, whichever is greater.⁷ The maximum is tied to the DC average Bronze premium and is published each year before September 30.

DC also has income-based exemptions the other states lack. Residents age 21 or older with income at or below 222% of the federal poverty level owe no penalty, and residents age 20 or younger are exempt at or below 324% of the poverty level.⁸

Massachusetts

Massachusetts works differently from every other mandate state. Instead of a flat-fee-versus-percentage formula, it applies a fixed monthly penalty that scales with income as a percentage of the federal poverty level. Residents at or below 150% of the poverty level owe nothing. Above that, the 2025 monthly amounts for individuals are:

150.1–200% FPL: $25 per month ($300 annually)
200.1–250% FPL: $49 per month ($588 annually)
250.1–300% FPL: $73 per month ($876 annually)
300.1–400% FPL: $113 per month ($1,356 annually)
400.1–500% FPL: $132 per month ($1,584 annually)
Above 500% FPL: $187 per month ($2,244 annually)

For reference, 150% of the federal poverty level is $22,590 for a single person and $46,800 for a family of four in 2025. Married couples who both lack coverage pay the sum of each spouse’s individual penalty, and the total can’t exceed 50% of the lowest monthly premium the person would have qualified for through the Massachusetts Health Connector.⁹

Gaps Shorter Than the Full Year

If you lacked coverage for only part of the year, the penalty is pro-rated by month. Six months uninsured in California means half the annual amount. Every mandate state treats you as covered for a full month if you had insurance for even one day of that month, so a gap that begins or ends mid-month doesn’t count.

Short gaps get a specific pass. California, New Jersey, and DC exempt a single coverage gap of fewer than three consecutive months.¹⁰ Rhode Island exempts gaps of one or two consecutive months.¹¹ Massachusetts uses a 63-consecutive-day rule that works out to roughly two months.⁹ These rules exist for people transitioning between jobs or plans, not for skipping coverage voluntarily.

Moving Into or Out of a Mandate State

If you moved during the year, the penalty applies only to the months you actually lived in the mandate state. California exempts anyone who was a bona fide resident of another state for a given month.¹² Rhode Island works the same way, and part-year residents claim an exemption for the months they lived elsewhere.¹¹

Move from Texas to California in July, and you’d only need California-qualifying coverage from July through December. You’d claim an exemption for January through June on your California return.

Exemptions That Waive the Penalty

Beyond the short-gap and part-year rules, every mandate state recognizes a common set of exemptions:

Income below the state filing threshold. If you aren’t required to file, you generally owe no penalty.
Unaffordable coverage. California exempts residents whose lowest available coverage would exceed 8.05% of household income for tax year 2026, and the other states apply similar affordability tests.¹³
Financial hardship such as eviction, foreclosure, bankruptcy, domestic violence, or a utility shutoff. Keep documentation like shutoff notices or court filings in case the state asks.
Membership in a recognized religious sect opposed to insurance benefits, or in a qualified health care sharing ministry.¹²
Incarceration during the tax year, other than time awaiting trial.
Not being a U.S. citizen or national and not being lawfully present.
Living abroad for a qualifying period.

Each state uses its own exemption codes and forms. New Jersey uses Schedule NJ-HCC on Form NJ-1040, and some New Jersey exemptions require applying for an exemption number before you file.¹⁴ California handles most exemptions directly on Form FTB 3853 with no separate application.¹⁵

Reporting Coverage at Tax Time

Coverage status goes on your state income tax return. In California, you either check the full-year coverage box on Form 540 (line 92) or complete Form FTB 3853 to figure the penalty or claim exemptions.¹⁵ The form asks month by month, for each household member, whether they were covered, uninsured, or exempt. Tax software walks through this automatically.

You should receive a Form 1095-B or 1095-C from your insurer or employer early in the year. New Jersey coverage providers must send 1095 forms by March 2, 2026 for the 2025 tax year.¹⁶ If yours doesn’t arrive, contact your insurer rather than guessing on the return. State revenue departments cross-reference what you report against the data insurers submit directly, and a mismatch triggers a notice.

If You Don’t Pay

The penalty is added to your total state tax liability and collected like any other state tax debt. The most common route is a refund offset: if you’re owed a state refund, the penalty is deducted before the refund reaches you. California, Massachusetts, New Jersey, Rhode Island, and DC all use this approach.

If you owe the penalty with no refund to absorb it, interest starts accruing on the balance, and unpaid amounts can lead to liens or wage garnishments over time. The penalty itself can’t be negotiated away once assessed, though interest and late-payment additions may be reduced through a payment plan.

Appealing a Penalty

If you think the penalty was assessed incorrectly, or you had an exemption you didn’t claim, you can appeal. Massachusetts has the most defined process: check the appeals oval on Schedule HC when you file, and the Department of Revenue holds the penalty while the appeal is pending. The Health Connector then sends a letter asking for grounds and documentation. Don’t attach hardship documentation to the original return, and don’t miss the response deadline, because a dismissed appeal is final and the penalty gets assessed with no second chance.¹⁷

In the other mandate states, an appeal typically starts by responding to the assessment notice. California taxpayers file a protest with the Franchise Tax Board; New Jersey residents go through the Division of Taxation’s standard appeals process. Keep 1095 forms, exemption documentation, and any hardship evidence somewhere you can find it, not buried after tax season ends.

1
Vermont Health Connect. Health Insurance Requirements
2
Internal Revenue Service. Questions and Answers on the Individual Shared Responsibility Provision
3
Franchise Tax Board. 2025 Instructions for Form FTB 3853 Health Coverage Exemptions and Individual Shared Responsibility Penalty
4
Covered California. Penalty Details and Exemptions
5
State of New Jersey. NJ Health Insurance Mandate – Shared Responsibility Payment
6
Rhode Island Division of Taxation. 2025 Individual Health Insurance Mandate Penalty Worksheet
7
D.C. Law Library. District of Columbia Code 47-5103 – District of Columbia Shared Responsibility Payments
8
D.C. Law Library. District of Columbia Code 47-5102 – Requirement to Maintain Minimum Essential Coverage; Exemptions
9
Mass.gov. TIR 25-1 – Individual Mandate Penalties for Tax Year 2025
10
Centers for Medicare & Medicaid Services. Exemption Information If You Had a Gap in Health Coverage
11
HealthSource RI. RI Health Insurance Mandate
12
California Legislative Information. California Government Code Title 24 – Section 100705
13
Covered California. Affordability Hardship Exemption
14
State of New Jersey. NJ Shared Responsibility Requirement – Types of Coverage Exemptions
15
State of California Franchise Tax Board. Health Care Mandate
16
State of New Jersey. NJ Shared Responsibility Requirement – Employers
17
Mass.gov. Learn How to Appeal the Health Care Penalty