Self-Employed Health Insurance Deduction Calculator
What you can deduct for health premiums as a freelancer — and the income tax it actually saves. This is an income-tax deduction only; it never lowers your self-employment tax.
Written by Dorothy Ibrahim, 10+ years in banking & finance
Reviewed by Benton Jona, EA (Enrolled Agent) — 2026-07-13
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How we calculate this
This calculator shows how much a self-employed person can deduct for health insurance premiums, and the income tax that deduction actually saves. The self-employed health insurance deduction is an above-the-line adjustment: you deduct premiums you paid for yourself, a spouse, and dependents, limited to your net business profit minus the deductible half of your self-employment tax. Enter your annual premiums, net profit, filing status, and tax year to see your deductible amount and the tax it saves — a saving valued at your income-tax bracket, because this deduction never reduces self-employment tax.
The formulas
- Income cap
- net profit − deductible half of self-employment taxThe most you can deduct under this rule, regardless of what you paid.
- Deductible premiums
- min(premiums paid, income cap)
- Income tax saved
- deductible premiums × your marginal income-tax rateIncome-tax rate only — no self-employment-tax term, because this deduction does not reduce SE tax.
Worked example
- With the defaults — $12,000 of premiums, $100,000 net profit, single, 2026 — the deductible half of self-employment tax is about $7,065, so the income cap is $100,000 − $7,065 ≈ $92,935. Your $12,000 in premiums is well under that cap, so the full $12,000 is deductible.
- Your marginal income-tax rate at this profit is 22%, so the deduction saves $12,000 × 22% = $2,640 in federal income tax.
- That is about $220 per month back in your pocket — and note the saving is figured at 22%, not at 15.3%, because the deduction does not touch your self-employment tax.
Rates, benchmarks & sources
- Self-Employed Health Insurance Deduction (above-the-line adjustment). — IRS Schedule 1 (Form 1040), line 17
- Self-Employed Health Insurance Deduction and the net-profit income limit. — IRS Form 7206 and Instructions
- Deductible half of self-employment tax used to derive the income cap. — IRS Schedule SE (Form 1040)
- 2026 federal income-tax brackets used for the marginal-rate saving. — IRS Rev. Proc. 2025-32
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- This is an income-tax deduction only — it does not reduce self-employment (Social Security and Medicare) tax, which is figured on net profit before the deduction.
- The deduction is capped at your net profit minus the deductible half of your SE tax; premiums above that income limit are not deductible under this rule (though they may count toward itemized medical expenses).
- You cannot take the deduction for any month you were eligible to join a subsidized health plan through your own or your spouse's employer — eligibility is tested month by month, which this estimate does not model.
- It assumes a sole proprietor on Schedule C taking the standard deduction; premiums paid with a marketplace premium tax credit reduce the deductible amount and are not handled here.
- It is an educational estimate for planning, not tax advice, and does not replace a return prepared or reviewed by a CPA/EA.
Frequently asked questions
How much health insurance can I deduct as self-employed?
Up to the total premiums you paid for yourself, your spouse, and dependents, limited to your net self-employment profit minus the deductible half of your self-employment tax. If your premiums exceed that income limit, the excess is not deductible under this rule, though it may count toward itemized medical expenses. The calculator applies that cap for you.
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 tax, which covers Social Security and Medicare and is figured on net profit before this deduction. That is why the tool values the saving at your income-tax bracket rather than at 15.3%.
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, so a few months of employer eligibility can reduce the deductible amount for the year.
What about premiums paid with a marketplace subsidy?
You can only deduct the portion of premiums you actually paid out of pocket, not the part covered by a premium tax credit. If you received advance premium tax credits, the deductible amount and the credit interact in a circular calculation, and tax software or a preparer should reconcile them on your return.
Related calculators
Federal figures only unless noted. State taxes vary.