The self-employed health insurance deduction

Q: Is it a Schedule C expense?

No. It's an adjustment to income taken on Schedule 1, not a business expense on Schedule C. That's actually good: it lowers your adjusted gross income directly, and because it's not on Schedule C it doesn't reduce the profit your self-employment tax is based on — but it does reduce your income tax.

If you buy your own health coverage, you can likely deduct the premiums — for you and your family. Here's who qualifies and how it works.

Updated June 2026

The basic idea

When you're self-employed and pay for your own health insurance, the premiums for you, your spouse, and your dependents are generally deductible. It covers medical, dental, and qualifying long-term-care premiums — including Marketplace (ACA) plans.

Who qualifies

You have a net profit from self-employment (sole proprietor, partner, or a more-than-2% S-corp shareholder).
You paid the premiums yourself.
The catch:you can't deduct premiums for any month you were eligible for an employer-subsidized plan — through your own other job, or a spouse's job. Eligibility disqualifies you even if you declined the plan.

How much, and where

The deduction is capped at your business's net profit— you can't deduct more than you earned. And it's an adjustment to income on Schedule 1, not a Schedule C expense. That distinction matters:

It lowers your adjusted gross income (and your income tax).
It does notreduce the profit your 15.3% self-employment tax is figured on (because it's off Schedule C).

If you also claimed a premium tax credit for a Marketplace plan, the two interact — a circular calculation worth letting software or a CPA handle.

This is one of the most-missed deductions for the newly self-employed, precisely because it isn't on Schedule C. Taxottic tracks it as an income adjustment in your forecast so it's counted, not forgotten.

Frequently asked

Who can take the self-employed health insurance deduction?

Self-employed people with a net profit — sole proprietors, partners, and more-than-2% S-corp shareholders — who paid for their own health coverage. The key disqualifier: you can't take it for any month you were eligible to participate in an employer-subsidized plan through your own job or a spouse's job. If you qualify, you can deduct premiums for yourself, your spouse, and your dependents.

What premiums count?

Medical, dental, and qualifying long-term-care insurance premiums for you and your family. Marketplace (ACA) plans count, though the deduction interacts with any premium tax credit you received. The deduction is limited to your business's net profit — you can't deduct more than the business earned.

Is it a Schedule C expense?

No. It's an adjustment to incometaken on Schedule 1, not a business expense on Schedule C. That's actually good: it lowers your adjusted gross income directly, and because it's not on Schedule C it doesn't reduce the profit your self-employment tax is based on — but it does reduce your income tax.

This guide is general information, not tax, legal, or accounting advice, and isn't a substitute for a licensed CPA or tax attorney. Tax rules change and depend on your situation; figures here are illustrative. Verify specifics against current IRS guidance or with your preparer.