Health Insurance Deduction for Self-Employed
One of the most valuable tax benefits available to self-employed individuals is the ability to deduct 100% of health insurance premiums - and it's frequently missed or misunderstood.
How It Works
If you're self-employed and not eligible for an employer-sponsored health plan (including through a spouse), you can deduct the premiums for health insurance for yourself, your spouse, and your dependents.
What's Covered
- Health insurance premiums (marketplace plans, private plans)
- Dental and vision insurance premiums
- Qualifying long-term care insurance premiums (subject to age-based limits)
The Eligibility Requirement
The AGI Impact
The AGI reduction can have cascading benefits: may improve QBI deduction eligibility, reduce IRMAA surcharges if approaching Medicare age, and affect income-based credits and deductions.
What It Doesn't Do
This deduction does not reduce self-employment tax. It only reduces income tax. The self-employment tax is calculated on Schedule SE before the health insurance deduction is applied.
The bottom line
Many self-employed individuals miss this deduction in their first year. Ensure it's on Line 17 of Schedule 1.
What would you do?
Alex pays $650/month ($7,800/year) for a marketplace health insurance plan for herself. She's not eligible for any employer-sponsored coverage.
Your Move
Locate your total health insurance premium payments for the year. Confirm you're not eligible for employer-sponsored coverage through another job or a spouse's employer. If you qualify, ensure your tax preparer is taking the above-the-line deduction on Line 17 of Schedule 1.
Sources
- Internal Revenue Service, Form 7206
Self-Employed Health Insurance Deduction (replaced the Publication 535 worksheet)
Educational information only. Not financial, tax, or legal advice or a recommendation. Figures are drawn from the primary sources cited above; verify current amounts with the source before acting.
Educational content only. Not financial, tax, or legal advice. Consult a qualified professional before making decisions based on your specific circumstances.
Last reviewed: April 2026