We used a model for permafrost hydrology informed by detailed measurements of soil ice content to better understand the potential risk of abrupt permafrost thaw triggered by melting ground ice, a key open question associated with permafrost response to a warming Arctic. Our spatially resolved simulations of a well-characterized site in polygonal tundra near Utqiaġvik, Alaska, agree well with multiple types of observations in the current climate. Projections indicate 63 cm of bulk subsidence from 2006 to 2100 in the strong-warming Representative Concentration Pathway 8.5 climate. Permafrost thaw as measured by the increase in active layer thickness (ALT)—the thickness of the soil layer that thaws each summer—is accelerated by subsidence, but the effect is relatively small. The ALT increases from the current-day value of approximately 50 cm to approximately 180 cm by 2100 when subsidence is included compared to about 160 cm when it is neglected. In these simulations, previously identified positive feedbacks between subsidence and thaw are self-limiting on decadal time frames because landscape runoff and increasing evapotranspiration result in drier tundra with weaker surface/atmosphere coupling. These results for a tundra site that is representative of large swathes of the Alaska North Slope suggest that subsidence is unlikely to lead to abrupt thaw over large areas. However, subsidence does have significant effects on the hydrology of polygonal tundra. Specifically, subsidence increases landscape runoff, which helps maintain streamflow in the face of increased evapotranspiration but also causes drier tundra conditions that could have deleterious effects on sensitive Arctic wetland ecosystems.