United States · Self-employed · Health insurance
Self-employed health insurance deduction calculator.
The deduction cannot exceed what the business earned. Enter your premiums and net profit to see the cap, the deductible amount and what is left over. Nothing you enter leaves your browser.
With $30,000 of net profit and $9,600 of premiums, the cap is $27,880.56 after half of self-employment tax, so the full $9,600.00 is deductible. At $8,000 of profit the cap falls to $7,434.82 and $2,165.18 of premiums is not deductible this way.
How this is calculated
- Net profit from the business that sponsors the plan is the starting cap, because the deduction cannot exceed the net earnings of that business.
- Subtract the deductible half of self-employment tax (computed here from your profit) and any SEP, SIMPLE or qualified-plan contributions you made for yourself, as the Form 7206 net earnings limit does.
- Deduction = the smaller of premiums and that cap. It is claimed on Schedule 1 as an adjustment to income.
- Rough saving multiplies the deduction by the marginal rate you enter. It is an illustration, not a calculation of your return.
Worked examples (single, no retirement contributions)
| Scenario | Result |
|---|---|
| Profit $30,000, premiums $9,600 | Half SE tax $2,119.44; cap $27,880.56; deduction $9,600.00 |
| Profit $8,000, premiums $9,600 | Half SE tax $565.18; cap $7,434.82; deduction $7,434.82; $2,165.18 not deductible this way |
| Rough saving at 12% on the first case | $1,152.00 |
The second case shows the limit at work: premiums cannot create a loss on this line.
What this does not cover
- Premium tax credit interaction (Publication 974). If you buy Marketplace coverage with advance credits the deduction and credit depend on each other and need the IRS worksheet.
- Months you were eligible for an employer-subsidized plan, including through a spouse. Premiums for those months do not count, so enter only qualifying months.
- S corporation owners above 2% and partners, whose rules run through W-2 wages or guaranteed payments.
- Qualified long-term care premiums, which have age-based limits.
- Your total tax: the saving is only a marginal-rate illustration.
Method and assumptions
The form-year instructions retrieved are the 2025 edition of Form 7206 because the 2026 edition is not yet out; the limit logic has not changed in the sources reviewed. Self-employment tax is computed with single-filer rules and no W-2 wages, which does not change the half-SE-tax figure.
Results vary with your actual income, deductions, credits and filing situation. This page uses the figures you enter and published IRS rules; it does not predict what you will earn or owe. This is general information, not tax, legal or accounting advice; confirm your own situation against the linked IRS instructions or with a qualified preparer. Nothing here collects or stores personal data.
Sources
- IRS Instructions for Form 7206 (Self-Employed Health Insurance Deduction), retrieved October 2026
- IRS: Self-employment tax (Social Security and Medicare taxes), retrieved October 2026
- IRS Topic no. 554, Self-employment tax, retrieved October 2026
Cite this page: TNAADO Tools, "Self-employed health insurance deduction calculator," tools.tnaado.ca/us/self-employed-health-insurance-deduction-calculator/, figures retrieved October 2026.
Frequently asked questions
Can I deduct health insurance premiums if I am self-employed?
Generally yes, if you have net profit, the plan is established under your business and you were not eligible for an employer-subsidized plan for that month. The deduction is claimed on Schedule 1, line 17, using Form 7206 where required.
Why can I not deduct all my premiums?
The deduction is limited by the net earnings of the business. This tool subtracts the deductible half of self-employment tax and retirement contributions made for yourself from net profit, so low-profit years cap the deduction.
Does the deduction reduce self-employment tax?
No. It is an adjustment to income, so it lowers income tax only. Self-employment tax is figured on profit before the deduction.
What if I get a Marketplace premium tax credit?
The credit and the deduction can depend on each other, which requires an iterative worksheet in IRS Publication 974. This calculator does not model that.
Is the tax saving shown a guarantee?
No. It multiplies the deduction by a rate you choose. Real savings depend on your whole return and results vary.
Not tax advice
This is an educational estimate built from the numbers you enter and published IRS rules. It is not tax advice and does not predict what you will earn or owe. Self-employed in Canada instead? Use the Canadian self-employment tax calculator.