What the deduction is
If you work for yourself and pay for your own health insurance, you can generally deduct the premiums on Schedule 1 (Form 1040), line 17. You do not need to itemize: it is an “above-the-line” deduction, so it also works if you take the standard deduction.
It covers premiums for you, your spouse and your dependents, and for a child who was under 27 at the end of the year even if they are not your dependent.
What premiums count
- Medical, dental and vision insurance you buy yourself, including Marketplace plans, for the part you pay after any premium tax credit.
- Medicare premiums you voluntarily pay.
- Qualified long-term care insurance, up to an age-based limit for each person that the IRS sets every year.
For a sole proprietor, the policy can be in your own name or in the name of your business.
Who qualifies
You generally qualify if you have a net profit from self-employment (Schedule C) for the year. Two rules decide how much you can deduct:
- No deduction for months with access to an employer plan. You cannot count any month in which you were eligible for a health plan subsidized by your employer, your spouse’s employer, or the employer of a dependent or of your child under 27. What matters is eligibility, even if you did not enroll.
- Profit limit. The deduction cannot be more than your net profit from the business, minus the deductible half of your self-employment tax and any retirement plan contributions you made for yourself from that business.
That makes this deduction most useful for full-time freelancers and gig workers who buy their own coverage.
An example
A single freelancer earns $50,000 of profit in 2026 and pays $500 a month ($6,000 a year) for a Marketplace plan with no premium tax credit.
- Their profit easily covers the premiums, so they can deduct the full $6,000.
- That lowers their income tax by about $576.
- Their self-employment tax does not change: it stays at $7,065, because this deduction is not subtracted when figuring it.
The saving is smaller than the premiums times the tax bracket because the deduction also lowers your qualified business income, which makes your QBI deduction a little smaller. At higher incomes and higher brackets, the saving grows.
How to claim it
- Add up the premiums for the months you were not eligible for an employer-subsidized plan.
- Check the profit limit.
- Report the deduction on Schedule 1, line 17. The worksheet in the Form 1040 instructions works for most people; in some cases you must use Form 7206, for example if you have more than one health plan and business. Tax software fills these in for you.
- Do not count the same premiums again as a medical expense on Schedule A.
If you bought Marketplace coverage and received advance payments of the premium tax credit, see IRS Publication 974: the deduction and the credit are figured together.
Common questions
- I started freelancing mid-year after leaving a job with insurance. Deduct only the months after you lost access to the employer plan.
- I have a W-2 job and a side business. If your W-2 employer offers a subsidized plan, you generally cannot take this deduction for those months, even for a separate policy.
- I had a loss this year. Without a net profit, there is nothing to deduct against. Premiums may still count as itemized medical expenses on Schedule A, subject to its limits.
- What about an HSA? Contributions to a health savings account are a separate deduction, with their own rules and limits.
Retirement contributions are the other big deduction self-employed people take outside Schedule C: see SEP IRA vs solo 401(k). For expenses you deduct on Schedule C itself, see our guide to 1099 deductions by profession.