Self-Employed Health Insurance Deduction Calculator
What you can deduct for health premiums as a freelancer — and the income tax it actually saves you.
Your details
Rough figures are fine — you can refine later.
How we calculate this
We apply the income limit, then value the deduction at your income-tax rate.
1. Income cap. selfEmploymentTax gives the deductible half of your SE tax; the deduction is limited to net profit minus that amount.
2. Deduction. The lesser of your premiums and that cap.
3. Tax saved. Deduction × your marginal *income-tax* rate, read from the bracket at your taxable income. No self-employment-tax term is included, because this deduction does not reduce SE tax.
Assumptions: sole proprietor, not eligible for employer-subsidized coverage, standard deduction. This is a planning estimate, not tax advice — confirm with a CPA/EA.
Primary sources
- IRS Publication 535 / Schedule 1 (Form 1040), Self-Employed Health Insurance Deduction
- IRS Publication 974, Premium Tax Credit (interaction with the deduction)
- IRS Instructions for Form 1040, Self-Employed Health Insurance Deduction Worksheet
Turn your health premiums into a tax deduction
One of the better deals for the self-employed is that the health insurance you buy for yourself is usually deductible — and not as a hard-to-reach itemized expense, but as an above-the-line adjustment that lowers your income and your AGI whether or not you itemize. This calculator shows how much you can deduct and, more usefully, the actual income tax it saves you.
Enter your annual premiums, net business profit, filing status, and tax year. You get your deductible amount, the tax it saves, and a flag if your income limits the deduction.
The income limit
The deduction can't exceed your net self-employment income — specifically, net profit minus the deductible half of your self-employment tax. If your premiums are smaller than that (the usual case), you deduct all of them. If your premiums are large relative to a lean profit year, the deduction is capped at that income figure, and the excess isn't deductible under this rule. It may still count toward itemized medical expenses, but that's a separate, much harder threshold to clear.
Income tax only — not SE tax
This is the point people most often get wrong. The self-employed health insurance deduction reduces your income tax. It does not reduce your self-employment (Social Security and Medicare) tax, which is calculated on net profit *before* this deduction. So the value of the deduction is your deductible premiums multiplied by your income-tax marginal rate — the bracket your taxable income sits in. This tool reads that rate from your income and applies it; there's no SE-tax component in the saving, and any calculator that adds one is overstating the benefit.
Two rules that trip people up
Employer coverage disqualifies you. For any month you were *eligible* to join a subsidized health plan through your own or your spouse's employer, you can't take the deduction — even if you declined that plan. Eligibility is tested month by month.
Subsidies reduce the deductible amount. If a marketplace premium tax credit covered part of your premiums, only what you actually paid out of pocket is deductible. Advance credits and the deduction interact in a circular way that tax software or a preparer should reconcile.
What this is
A planning estimate for a sole proprietor with the standard deduction, not eligible for employer-subsidized coverage. Your exact deduction depends on your full return and the month-by-month eligibility test. Not tax advice — confirm with a CPA or EA.
Common questions
How much health insurance can I deduct as self-employed? + −
Up to the total premiums you paid for yourself (and spouse/dependents), limited to your net self-employment profit minus the deductible half of your self-employment tax. If premiums exceed that income limit, the excess is not deductible under this rule (though it may count toward itemized medical expenses).
Does this reduce my self-employment tax too? + −
No. The self-employed health insurance deduction is an above-the-line adjustment that lowers your income tax and your AGI. It does not reduce self-employment (Social Security and Medicare) tax, which is figured on net profit before this deduction.
Can I claim it if my spouse could cover me at their job? + −
No. You cannot take the deduction for any month you were eligible to participate in a subsidized health plan through your own or your spouse’s employer. Eligibility is tested month by month.
What about premiums paid with a marketplace subsidy? + −
You cannot deduct the portion of premiums covered by a premium tax credit — only what you actually paid out of pocket. If you received advance credits, the deductible amount and the credit interact, and tax software or a preparer should reconcile them.
Keep going
Prepared for tax year 2026. Every rate and cap on this page cites a primary IRS or SSA source. Estimates only — not tax or financial advice. — for planning purposes only, not tax, legal, or financial advice.