Self-employed health insurance deduction
If you pay for your own health insurance, you can usually deduct the premiums. See how much, how much income tax it saves, and what the insurance really costs you each month.
Your self-employed health insurance deduction
$0
of $0 in premiums for the eligible months.
Claimed on Form 7206 and Schedule 1. If you get a Marketplace premium tax credit, the two interact; see IRS Publication 974. Federal tax only.
How the deduction works
- Add up the premiums for the months when neither you nor your spouse could join an employer-subsidized plan.
- Check the limit: profit minus half of SE tax and retirement contributions.
- Deduct the smaller amount on Form 7206 and Schedule 1. It lowers your AGI and income tax, not self-employment tax.
Example: a single freelancer with $60,000 of profit pays $550 a month all year. The $6,600 deduction saves about $634 in federal income tax, so the insurance really costs about $497 a month.
The saving is less than the full tax bracket because the deduction also lowers profit for the 20 % QBI deduction. See your full tax with the self-employment tax calculator, or compare with a job that includes insurance using the 1099 vs W-2 calculator.
Questions
Who can take the self-employed health insurance deduction?
Self-employed people with a net profit on Schedule C, partners with self-employment earnings and some S corp shareholders. The plan has to be in your name or your business's name.
What premiums count?
Medical, dental and vision insurance, qualified long-term care insurance (up to age-based limits), and some voluntary Medicare premiums. Coverage can be for you, your spouse, your dependents, and your children who were under 27 at the end of the year.
What if my spouse has insurance through work?
You cannot take the deduction for any month you were eligible to join an employer-subsidized plan, including your spouse's, even if you did not sign up. Count only the months with no such plan available.
Does it lower self-employment tax?
No. It lowers your income tax only. You still pay self-employment tax on the full profit.
Is there a limit?
Yes. The deduction cannot be more than your net profit from the business minus the deduction for half of self-employment tax and any SEP, SIMPLE or solo 401(k) contributions. Premiums above that may still count as a medical expense if you itemize.
I get a Marketplace premium tax credit. Can I deduct the premiums?
Only the part you pay yourself, after the credit. The deduction and the credit affect each other, so the IRS has a special calculation for it in Publication 974.
Sources
Last updated November 3, 2026. Figures for tax year 2026 from IRS and SSA sources.