Self-Employed Health Insurance Deduction Calculator
Tax year: 2026 · Last updated 2026-06-21 · Source: IRS
Reviewed by Dr. Julian Vance, co-founder, lead data architect & primary author · 2026-06-21
Medical, dental, and vision for yourself, your spouse, and dependents.
Your net profit for the year, before the health insurance deduction.
W-2 wages, a spouse's income, interest, etc.
This deduction is not available for any month you were eligible to join a subsidized employer plan through your own job or your spouse's employer — even if you chose not to enroll.
Income tax savings from the deduction
$960
You save 9.6% for every dollar of premium
What coverage actually costs you
How the self-employed health insurance deduction works
Health insurance is expensive when you buy it yourself. The good news is that the IRS lets most self-employed people deduct the full cost of premiums directly from their gross income — reducing the amount of income tax they owe.
What this deduction covers
- Medical, dental, and vision insurance for you, your spouse, and dependents
- Long-term care insurance premiums (up to age-based limits)
- Medicare Part B, C, and D premiums if you are self-employed
- Children under age 27 at the end of the year, even if they are not your tax dependent
How the deduction is calculated
The IRS limits the deduction to your net self-employment profit. If you paid $15,000 in premiums but your Schedule C shows $12,000 in net profit, you can deduct $12,000 — not $15,000.
This deduction is above-the-line (it reduces adjusted gross income), so it benefits you regardless of whether you itemize deductions. It does not reduce self-employment tax — SE tax is computed on net profit before this deduction is taken.
How we compute the tax savings
The calculator runs your income tax twice — once without the deduction and once with it — and shows the difference as your tax savings. The savings depend on your marginal income tax rate, not a flat percentage.
A worked example
A single freelancer has $80,000 net profit and pays $10,000 in annual health insurance premiums in 2026:
- Deduction: $10,000 (under net profit cap)
- Without the deduction: taxable income ≈ $52,348 · income tax ≈ $6,564
- With the deduction: taxable income ≈ $42,348 · income tax ≈ $4,364
- Tax savings: ~$2,200
- Effective cost of health insurance: $10,000 − $2,200 = $7,800 after tax
This calculator models the simplified deduction cap (premiums ≤ net profit). The IRS has a more complex iterative worksheet for high-income situations involving both earned income and self-employment income. Confirm with a tax professional if your situation is more involved.
Sources
Frequently asked questions
Can self-employed people deduct health insurance premiums?+
Yes. If you're self-employed and paid for your own health insurance, you can generally deduct 100% of those premiums — for medical, dental, and vision coverage for yourself, your spouse, and your dependents. The deduction is taken above the line (on Schedule 1), which means you get it even if you don't itemize. There is one key limit: the deduction can't exceed your net self-employment profit for the year.
Does this deduction reduce my self-employment tax?+
No. The self-employed health insurance deduction reduces your income tax but it does not reduce your self-employment tax. SE tax is calculated on your net profit before the health insurance deduction. Only the deductible half of SE tax itself reduces your income-tax base.
Can I deduct dental and vision insurance as a self-employed person?+
Yes. Dental and vision insurance premiums for yourself and your family count toward this deduction, along with medical and long-term care premiums. Medicare Part B, Part C (Medicare Advantage), and Part D premiums also qualify if you are self-employed.
What if I am eligible for coverage through my spouse's employer?+
You cannot take the self-employed health insurance deduction for any month you were eligible to participate in a subsidized health plan through your employer or your spouse's employer — even if you chose not to enroll. Eligibility blocks the deduction for that month, not just actual enrollment.
What if my premiums are more than my net profit?+
The deduction is capped at your net self-employment profit. If you paid $12,000 in premiums but only made $8,000 in net profit, you can deduct $8,000. The remaining $4,000 may be deductible as a medical itemized expense (subject to the 7.5% AGI floor), but that is beyond the scope of this calculator.
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