Can I deduct health insurance premiums if I am self-employed in 2025?

Yes, self-employed individuals can deduct 100% of their health insurance premiums — and it's one of the most valuable deductions available. Here's how it works:

What you can deduct:

• Health insurance premiums for yourself, your spouse, your dependents, and your children under age 27 (even if they're not your dependents)
• Dental and vision insurance premiums
• Long-term care insurance premiums (subject to age-based limits)
• Medicare premiums (Parts A, B, C, and D) if you're self-employed and 65+

Where to deduct it:

This is an above-the-line deduction reported on Schedule 1 (Form 1040), Line 17 — NOT on Schedule C. This is important because it reduces your AGI (which affects other deductions and credits) even if you don't itemize.

Key requirements:

• You must have net self-employment income — the deduction cannot exceed your net profit from the business under which the insurance is established
• You cannot be eligible for employer-subsidized health insurance through your own employer, your spouse's employer, or your parent's plan (if under 26). Even if you don't enroll, eligibility disqualifies you for the months you're eligible.
• The insurance plan must be established in the name of the business or the self-employed individual

What this deduction does NOT reduce:

The self-employed health insurance deduction reduces your income tax but does NOT reduce your self-employment tax. This is different from most Schedule C deductions.

Marketplace insurance (ACA):

If you buy insurance through the Healthcare.gov marketplace and receive a Premium Tax Credit (PTC), you can only deduct the portion of premiums you actually paid out of pocket (not the subsidized portion). There's a circular calculation involved since the deduction affects your AGI, which affects PTC eligibility. Most tax software handles this iterative calculation automatically.

Health insurance vs. HSA:

If you have a high-deductible health plan (HDHP), you can also contribute to a Health Savings Account (HSA): $4,150 (self-only) or $8,300 (family) for 2024, plus $1,000 catch-up if 55+. HSA contributions are an additional above-the-line deduction on Schedule 1.