Self-Employed? Here’s How to Deduct Health Insurance Premiums on Your Taxes

If you’re self-employed in the United States, every dollar matters—especially at tax time. One of the biggest questions freelancers, gig workers, and small business owners ask is:

“Can I deduct my health insurance premiums from my taxes?”

The good news? Yes, you can. The IRS offers a special tax deduction just for the self-employed to help ease the burden of health insurance costs. Here’s a complete guide on how it works, who qualifies, and how to maximize your deduction in 2024.

What is the Self-Employed Health Insurance Deduction?

The Self-Employed Health Insurance Deduction is an IRS rule that allows qualifying individuals to deduct 100% of their health insurance premiums from their taxable income.

This includes premiums paid for:

• Medical

• Dental

• Vision coverage

• Long-term care insurance

• Insurance for your spouse, dependents, and children under 27—even if they’re not your dependents

This is considered an “above-the-line” deduction, meaning you don’t have to itemize to claim it.

Who Qualifies as Self-Employed?

You may qualify if you meet one of these criteria:

• You run a sole proprietorship or single-member LLC

• You’re a freelancer, contractor, or gig worker (like on Upwork, Fiverr, DoorDash, Uber, etc.)

• You’re a partner in a partnership with net earnings from self-employment

• You’re an S corporation shareholder owning more than 2% of the business and receive income from it

Key Eligibility Rules for Claiming the Deduction

Before you deduct your health insurance premiums, make sure you meet these IRS requirements:

1. You must have net profit from your self-employment activity during the year.
   → No profit = No deduction.

2. The policy must be in your name or your business’s name.
   → If you pay for health insurance through a spouse’s employer plan, you cannot deduct it.

3. You can’t claim more than your self-employment income.
   → If your self-employed earnings are $10,000, but your premiums are $12,000, you can only deduct $10,000.

What Expenses Are Deductible?

Here’s a list of health-related insurance expenses you can deduct if you’re self-employed:

• Monthly health insurance premiums

• Vision and dental plan premiums

• Long-term care insurance (subject to age-based limits)

• Premiums paid for your spouse and dependents

• Coverage for children under 27 (even if they aren’t dependents)

🚫 Not deductible: copays, prescriptions, or out-of-pocket medical expenses (unless you itemize deductions).

How to Claim the Deduction on Your Taxes

To claim this deduction:

1. Calculate your eligible premiums paid during the year.

2. Ensure your self-employment income is greater than or equal to your premium total.

3. Report it on Schedule 1 (Form 1040), Line 17 — “Self-Employed Health Insurance Deduction.”

If you also qualify for a premium tax credit through the ACA Marketplace, you’ll need to adjust your deduction accordingly. The IRS has a special worksheet for this in Publication 974.

Common Mistakes to Avoid

• Trying to deduct when you’re eligible for employer coverage (e.g., through a spouse)
  → This disqualifies you.

• Overestimating long-term care deductions
  → These have IRS-set annual limits based on your age.

• Forgetting to keep proof of insurance payments
  → Keep receipts, bank records, or 1095-A/B/C forms for documentation.

Pro Tip: Use This Deduction Strategically

If you’re running your own business, even part-time, this deduction can significantly reduce your tax liability. Combining it with other small business deductions—like home office, equipment, and mileage—can lead to serious savings.

Hiring a CPA or using tax software like TurboTax, H&R Block, or TaxAct can help make sure you don’t miss anything.

Important 2024 Tax Deadlines

• April 15, 2025 – Standard federal filing deadline

• October 15, 2025 – Extension deadline (if filed by April)

Being self-employed has its perks—freedom, flexibility, and yes, tax benefits. If you’re paying for your own health insurance, don’t leave money on the table. The Self-Employed Health Insurance Deduction is one of the most powerful tools you can use to reduce your taxable income and save big at tax time.

📌 Frequently Asked Questions (FAQ)

❓ Is health insurance tax deductible for self-employed individuals?

Yes, if you’re self-employed and meet the IRS requirements, you can deduct 100% of your health insurance premiums from your taxable income. This includes coverage for your spouse, dependents, and children under 27—even if they are not dependents on your tax return.

❓ What types of insurance premiums can I deduct?

You may be able to deduct premiums for:

• Medical insurance

• Dental insurance

• Vision insurance

• Qualified long-term care insurance

However, the policy must be under your name or your business’s name, and the total deduction cannot exceed your net self-employment income.

❓ Where do I claim the self-employed health insurance deduction on my taxes?

You can claim the self-employed health insurance deduction on Schedule 1 (Form 1040), Line 17. This is considered an above-the-line deduction, meaning you don’t need to itemize your deductions to claim it.

❓ Can I deduct health insurance if I qualify for a plan through my spouse’s employer?

No. If you’re eligible for employer-sponsored coverage through your spouse’s job and you choose not to enroll, the IRS does not allow you to claim the deduction for your own health insurance premiums.