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Health Insurance Tax Deductions for the Self-Employed in your state
If you're self-employed in your state, your health premiums are one of the best deductions you have — and most people claim it wrong or not at all.
The self-employed health insurance deduction
You can deduct 100% of premiums for medical, dental and vision coverage for yourself, your spouse and dependents, as an adjustment to income (above the line). It applies whether you buy on HealthCare.gov or a private plan. The limit is your net self-employment income from the business.
State income taxes
If your state has an income tax, the self-employed health premium deduction lowers state taxable income too; in no-income-tax states like Texas, Tennessee and Florida it only helps federally.
The subsidy interaction
Because the deduction lowers your adjusted gross income, it can also lower the income used to calculate your marketplace subsidy — which can push you under the 400% cliff. It's circular (the deduction depends on the subsidy, which depends on the deduction); tax software handles the iteration, but it's worth planning with a CPA if you're close to the line.
Three mistakes we see
Deducting premiums the business reimbursed (double dipping). Forgetting that a spouse's employer coverage eligibility disqualifies the deduction for the months it was available. And paying premiums personally from an S-corp instead of running them through payroll, which is how S-corp owners have to do it.
HSA on top
If you choose an HSA-eligible plan — several private plans in your state qualify — you can also deduct HSA contributions ($4,400 individual / $8,750 family in 2026). That's two deductions stacked on one premium.
Not tax advice — confirm with your CPA. For the insurance half, check your options.