When you work for yourself, you pay for your own health insurance. The tax code gives some of that back through the self-employed health insurance deduction. This guide covers who can take it, what counts, the limits, and how it works with a Marketplace tax credit. The rules here come from the 2025 versions of IRS Form 7206, its instructions, and IRS Publication 974, the latest as of October 2, 2026.
This is general tax information, not tax advice. Your numbers and your return are your own. Talk to a tax pro before you claim the deduction.
Who can take the deduction
The IRS says one of these must be true for the year:
- You were self-employed and had a net profit on Schedule C or Schedule F.
- You were a partner with net earnings from self-employment on Schedule K-1.
- You used one of the optional methods to figure net earnings on Schedule SE.
That can include an HVAC tech, an electrician, a plumber, a lawn care owner, or a real estate agent who files Schedule C. You can see the industries we serve. S corporation owners follow different rules, so they are not covered here.
The insurance plan must be set up under your business. If you file Schedule C, the policy can be in your own name or in the business name. Partners have extra rules about how the partnership pays or reimburses the premiums.
What premiums count
You may be able to deduct what you paid for medical, dental, and vision insurance. You can also count qualified long-term care insurance, up to a limit based on age.
The coverage can be for you, your spouse, and your dependents. It can also cover your child who was under 27 at the end of the year, even if that child is not your dependent. A child includes a son, daughter, stepchild, adopted child, or foster child.
Limit 1: It can't be more than your profit
The deduction is capped by what your business earned. On Form 7206, you start with your net profit from the business that set up the plan. Then you subtract the part of your self-employment tax that you deduct, and any SEP, SIMPLE, or qualified plan contributions from that business. Your deduction is the smaller of that number or the premiums you paid.
So if your business shows a loss, or a very small profit, the deduction may be small or zero for that business.
Limit 2: The job-plan rule, including your spouse's
You can't take the deduction for any month you were eligible for a health plan paid for in part by an employer. That includes your own employer and your spouse's employer. It applies even if you didn't sign up.
The same rule applies to coverage for a dependent or a child under 27 if they could join a subsidized plan through their own employer. You go month by month. Premiums you can't deduct this way may count as a medical expense on Schedule A, if you itemize.
If you also get a premium tax credit
Many self-employed people buy a Marketplace plan and get a premium tax credit. On the application, you estimate your net self-employment income, and your savings are based on that estimate for the coverage year.
The deduction and the credit affect each other. The deduction lowers your income, which can change your credit. The credit lowers what you paid, which can change your deduction. IRS Publication 974 has worksheets for this. They include a shorter method and a longer one that may give a better result. The key rule: your deduction plus your credit for the same premiums can't be more than the premiums.
What the deduction does not do
- It does not lower your self-employment tax. You can't subtract it when you figure net earnings for self-employment tax.
- You can't count the same premiums again as a medical expense on Schedule A.
- It does not cover months when you could join a subsidized job plan.
How to claim it
Most people can use the worksheet in the Form 1040 instructions. You must use Form 7206 if you had more than one source of income subject to self-employment tax, if you file Form 2555, or if you count long-term care premiums. If your plan came from the Marketplace and you got or are claiming a premium tax credit, use the worksheets in IRS Publication 974 to figure the deduction. Use a separate Form 7206 for each business that set up a plan. The amount goes on Schedule 1 (Form 1040), line 17.
Choosing the plan comes first. You can compare a Marketplace plan with nationwide private PPO plans. Some private plans ask health questions, and approval is not guaranteed. Some may not cover care for health problems you had before you enrolled. For a rough first look at pricing, try our Policy Pricing Calculator.