2026 tax year
Self-employed health insurance deduction
Your premiums come off your income tax. They do not come off your self-employment tax, and that gap is worth knowing before you file.
Your premiums and profit
Updated for 2026 rulesMedical, dental, vision, and long-term care within its age limit. Your own policy, not one your spouse's employer subsidises.
The ceiling on the deduction. Premiums above your profit carry no deduction here.
The bracket your last dollar lands in. These are the 2026 federal bracket rates; pick yours.
Eligibility disqualifies you for those months even if you decline the plan.
Your Schedule 1 deduction
Enter your premiums and Schedule C profit, then press Work out my deduction.
If you are self-employed and buy your own cover, 100.0% of the premiums is deductible: medical, dental, vision, long-term care (limits apply). There is no 7.5%-of-AGI floor to clear and no need to itemise. The ceiling is your business: the deduction cannot exceed net SE profit. This works out the deduction, what it saves at your bracket, and the one thing it does not do.
Schedule 1, not Schedule C
Health premiums are not a business expense. They never appear on Schedule C, so they never reduce line 31 net profit, and self-employment tax is charged on that line 31 figure. The deduction is claimed further down, as an adjustment on Schedule 1, which lowers AGI and therefore income tax only.
On $70,000 of net profit, self-employment tax is $9,891. Claim the $9,600 deduction and self-employment tax is still $9,891. Had the premiums been run through Schedule C as an expense, SE tax would have dropped to $8,534, a further $1,356. That $1,356 is the saving people budget for and never see.
Worked example, four premium bills
The same 100.0% rule produces four different answers, because the profit ceiling, the bracket and the spouse test each bite in a different place:
| Filer | Premiums | Net profit | Deduction | Income tax saved | SE tax change |
|---|---|---|---|---|---|
| Designer, own plan, 22.0% bracket | $9,600 | $70,000 | $9,600 | $2,112 | $0 |
| First year consulting, 12.0% bracket | $14,400 | $9,000 | $9,000 | $1,080 | $0 |
| Family plan, joint return, 24.0% bracket | $21,600 | $160,000 | $21,600 | $5,184 | $0 |
| Designer, spouse's employer plan available | $9,600 | $70,000 | $0 | $0 | $0 |
The consultant paid $14,400 and could deduct only $9,000, because the deduction cannot exceed net SE profit. The other $5,400 is stranded: it does not carry to next year, though it can go on Schedule A as a medical expense if the itemised total clears the AGI floor. The family filer's $21,600 is worth $5,184 at 24.0%, bringing the real cost of cover down to $16,416. And the designer with a spouse's plan on offer deducts nothing at all, on identical premiums and identical profit to row one.
Questions
Does this deduction lower my self-employment tax?
No. SE tax is computed on Schedule C net profit, and this deduction is taken after that, on Schedule 1. At $70,000 of profit you owe $9,891 of SE tax whether or not you claim the deduction. The half-of-SE-tax adjustment is a separate line and does reduce AGI, but the premiums themselves never reach the SE tax base.
What happens if my premiums are more than my profit?
The deduction stops at your profit (it cannot exceed net SE profit), so the consultant above deducts $9,000 of a $14,400 bill and loses the deduction on the remaining $5,400. A loss year means no deduction at all. If you also draw a salary elsewhere, only the self-employed side counts toward this ceiling.
My spouse's employer offers a plan I turned down. Can I still deduct?
No. The disqualifier is written into the rule itself: Eligible for employer-subsidized plan through spouse's employer. Being eligible is enough; declining the plan does not restore the deduction. The test runs month by month, so if their coverage started in September you can still deduct premiums for January through August.
I run an S corp. Does this apply to me?
Differently. S Corp owner-employees include health insurance in W-2 Box 1 wages, then deduct as SE health insurance on 1040. The corporation pays or reimburses the premiums and reports them as wages, which are exempt from Social Security and Medicare tax on that amount, then you take the same Schedule 1 deduction personally. Skip the W-2 reporting step and the deduction is not available to you.
What can the policy cover?
Medical, Dental, Vision, Long-term care (limits apply), for you, your spouse, your dependants and your children under 27. Long-term care premiums count only up to an age-banded annual cap. Premiums already paid with pre-tax dollars, or covered by an advance premium tax credit, cannot be deducted twice.
Related tools
- ACA subsidy calculator the deduction lowers the MAGI your subsidy is set from
- 1099 tax calculator income tax and SE tax on freelance profit
- S corp tax calculator the W-2 Box 1 route for owner-employees
- Quarterly tax calculator factor the deduction into your estimates
- Self-employed retirement calculator the other big Schedule 1 adjustment
- COBRA vs marketplace compare before you pick a plan
Estimate for the 2026 tax year, based on the premiums, profit and marginal rate you enter. Your actual deduction depends on the months you were covered, whether an advance premium tax credit was applied, and any long-term care age cap. Not tax advice.