Eligibility Check
Self-Employment Income
Annual Insurance Premiums Paid
How to Use This Calculator
- Answer the two eligibility questions — whether you’re self-employed with net profit, and whether employer-sponsored coverage was available to you at any point during the year.
- Enter your net self-employment profit — this is the figure from Schedule C line 31, Schedule F line 34, or your K-1 from a partnership. The deduction cannot exceed this amount.
- Select your marginal income tax rate. This is used to estimate how much the deduction reduces your tax bill.
- Enter your annual premiums separately for health, dental, and vision coverage — both your own and any amounts paid for your spouse and dependents.
- If you pay long-term care insurance premiums, enter the annual amount and your age. The IRS caps the deductible portion based on age, and the calculator applies the correct 2026 limit automatically.
- Click Calculate to see your total deductible amount, AGI reduction, estimated tax savings, and effective out-of-pocket premium cost after the deduction.
How the Self-Employed Health Insurance Deduction Works
What This Deduction Is
The self-employed health insurance deduction allows eligible self-employed individuals to deduct 100% of premiums paid for health, dental, vision, and qualified long-term care insurance for themselves, their spouse, and their dependents. Unlike most medical expense deductions, this one is taken above the line — meaning it reduces your adjusted gross income directly, regardless of whether you itemize deductions. This makes it one of the most valuable deductions available to self-employed individuals because it lowers your AGI, which in turn can affect eligibility for other deductions, credits, and tax thresholds.
Who Qualifies
To claim this deduction you must have net profit from self-employment — reported on Schedule C, Schedule F, or as a partner in a partnership. S corporation shareholders who own more than 2% of the company can also qualify, though the premiums must be included in their W-2 wages first. The deduction is not available for any month during which you were eligible to participate in a health plan subsidized by an employer — either your own employer if you also have W-2 income, or a plan available through your spouse’s employer. The key word is eligible: if the employer coverage was available to you and you chose not to enroll, the deduction is still disallowed for those months.
The Net Profit Limitation
The deduction cannot exceed your net self-employment profit for the year. If your premiums total $12,000 but your net SE profit was only $9,000, your deduction is capped at $9,000. This also creates a circular calculation: the SE tax deduction (the deductible half of SE tax) reduces your net income, which can affect the health insurance deduction limit. The IRS provides a worksheet in Publication 535 and Form 7206 to handle this iteration correctly — this calculator uses an approximation that works for most situations.
What Premiums Qualify
Qualifying premiums include medical insurance covering hospitalization, surgical, and major medical expenses; dental insurance; vision care insurance; and qualified long-term care insurance contracts up to the annual age-based limit. Premiums must be paid for yourself, your spouse, your dependents, and children under age 27 at the end of the tax year. Premiums paid through a Marketplace plan with advance premium tax credits are partially reduced — only the portion you paid out of pocket (not covered by the credit) is deductible.
Long-Term Care Insurance Limits
The IRS imposes age-based caps on the amount of long-term care insurance premiums that can be included in the self-employed health insurance deduction. For 2026, the limits are $470 for age 40 and under, $880 for ages 41–50, $1,760 for ages 51–60, $4,710 for ages 61–70, and $5,880 for ages 71 and older. These limits apply per person — if you and your spouse both pay LTC premiums, each person’s limit is calculated separately based on their own age. Any LTC premiums exceeding the deductible cap may be deductible as itemized medical expenses, subject to the 7.5% AGI floor.
2026 Long-Term Care Premium Deduction Limits
| Age at End of Tax Year | 2026 Deductible LTC Limit |
|---|---|
| 40 or younger | $470 |
| 41 – 50 | $880 |
| 51 – 60 | $1,760 |
| 61 – 70 | $4,710 |
| 71 or older | $5,880 |
Frequently Asked Questions
Can I deduct premiums if my spouse has access to employer coverage but I don’t?
No. If your spouse’s employer offers health coverage that you are eligible to enroll in — even as a dependent on their plan — you are considered to have access to employer-sponsored coverage for those months. The deduction is disallowed for any month this applies. This is one of the most commonly misunderstood aspects of the rule. The test is eligibility, not enrollment: if you could have joined the plan but chose not to, you still can’t claim the deduction for those months.
Where do I claim this deduction on my tax return?
The self-employed health insurance deduction is reported on Schedule 1 of Form 1040, line 17. It is not reported on Schedule C — it reduces your total income on the front of your return, not your business profit. This is why it’s called an above-the-line deduction: it reduces AGI regardless of whether you itemize. The calculation worksheet is in IRS Publication 535, or you can use Form 7206 (Self-Employed Health Insurance Deduction) which was introduced to formalize the computation.
Does this deduction reduce my self-employment tax?
No. The self-employed health insurance deduction reduces your income tax only — it does not reduce the net earnings subject to self-employment tax. SE tax is calculated on Schedule SE based on your net profit from Schedule C, before the health insurance deduction is applied. This distinguishes it from the deductible half of SE tax, which does reduce both income tax and effectively lowers your income for other calculations. The net effect is still significant — at a 22% marginal rate, every $1,000 in health premiums saves $220 in income tax.
What if my income fluctuates and I have a net loss some years?
If your net self-employment profit is zero or negative for the year, you cannot claim the health insurance deduction for that year — the deduction is limited to net profit. In years with a loss, your health insurance premiums may be deductible as itemized medical expenses on Schedule A, subject to the 7.5% AGI floor. If you have both profitable and loss years, the deduction is calculated separately for each tax year based on that year’s net profit.
Can I deduct premiums for my adult children?
Yes, for children under age 27 at the end of the tax year, even if they are not your tax dependents. This expanded rule, in place since 2010, means you can include premiums paid for a 24-year-old child who files their own return and supports themselves. The child does not need to qualify as your dependent — they just need to be under 27 at year-end. This is one of the few places in the tax code where the definition of “dependent” is specifically broadened for health coverage purposes.
How do Marketplace premium tax credits interact with this deduction?
If you purchase insurance through the Health Insurance Marketplace and receive advance premium tax credits (APTC), you can only deduct the portion of premiums you actually paid out of pocket — not the amount covered by the credit. This requires careful coordination: claiming the full premium as a deduction while also receiving the full credit would be double-dipping. Your Form 1095-A from the Marketplace shows the total premium, the credit amount, and your net payment — use the net payment figure when calculating your deduction. If you repay some credit on Form 8962, that repaid amount may also be deductible.
Tips for Maximizing This Deduction
- Pay premiums from a business account. While not strictly required, paying health insurance premiums from your business bank account creates a clear paper trail connecting the expense to your self-employment activity — useful in an audit.
- Track the employer coverage eligibility month by month. If you had a W-2 job for part of the year and were eligible for that employer’s health plan, you can still claim the deduction for the months when no employer coverage was available. The calculation is done on a month-by-month basis — don’t assume the entire year is disqualified.
- Include your family’s premiums. Premiums for your spouse, dependents, and children under 27 are all included. Many self-employed individuals only enter their own premium and miss a significant portion of the deduction.
- Consider the interaction with ACA subsidies. If your income is between 100% and 400% of the federal poverty level, Marketplace premiums with premium tax credits require careful handling. A tax professional can help you optimize the interaction between the SEHI deduction and the premium tax credit.
- Use Form 7206. The IRS introduced Form 7206 specifically to formalize the self-employed health insurance deduction calculation, including the iterative calculation involving the SE tax deduction. Using this form ensures accuracy and provides documentation if your return is reviewed.