Is Health Insurance Tax Deductible for Your Business?

Yes, health insurance is generally tax deductible for self-employed individuals, freelancers, and small business owners. The IRS allows you to deduct ordinary and necessary business expenses, and health insurance typically qualifies when used for legitimate business purposes.

Key Rules for Deducting Health Insurance

Self-employed individuals can deduct health insurance premiums. IMPORTANT: This is deducted on Schedule 1 (Form 1040), NOT Schedule C. Limited to net business profit. Not deductible if you're eligible for employer-subsidized health plan.

Requirements to Claim This Deduction

• Must be self-employed or S-Corp shareholder
• Deducted on Schedule 1, not Schedule C
• Limited to net profit
• Not deductible if eligible for employer plan

How to Document Health Insurance for Tax Purposes

Proper documentation is critical for any business deduction. For health insurance, you should:

• Keep all receipts and invoices showing the amount paid
• Record the date of the expense and the business purpose
• If mixed-use, maintain a log showing business vs. personal usage
• Store records for at least 3 years (7 years for major purchases)

Source: IRC § 162(l); IRS Publication 535. This information is for educational purposes only. Consult a qualified tax professional for advice specific to your situation.