Handbook / Health coverage

Self-employed health insurance deduction for the 2026 tax year

Tax-year note: Tax information on this page applies to the 2026 tax year (returns filed in 2027), from IRS pages checked in November 2026. Figures and dates are labelled with their tax year where they appear. Check current IRS pages before you rely on them.

Health insurance is one of the largest costs of self-employment. The self-employed health insurance deduction lets many owners deduct those premiums from income, which can be worth a lot over a year. The rules have a few traps, especially around employer coverage and Marketplace credits. This guide explains them for the 2026 tax year.

The latest Form 7206 instructions when this page was checked were the 2025 edition; the rules below follow them. Check the 2026 instructions when you file.

Who qualifies

The Form 7206 instructions say you may be able to take the deduction if one of these applies:

• you were self-employed and had a net profit reported on Schedule C or Schedule F
• you were a partner with net earnings from self-employment
• you used an optional method to figure net earnings on Schedule SE
• you received wages from an S corporation in which you were a more-than-2% shareholder

A business with a loss for the year cannot support the deduction.

Which premiums count

Generally, premiums for:

• medical and dental insurance
• qualified long-term care insurance, subject to age-based limits
• Medicare premiums you voluntarily pay, which the instructions say can be used

Coverage can be for you, your spouse, your dependants and your child who was under age 27 at the end of the year, even if the child was not your dependant.

The plan must be established under your business. For a sole proprietor, a policy in your own name generally qualifies; for an S corporation shareholder, the corporation must pay or reimburse the premiums and include them in wages.

The employer plan rule

The instructions state that you cannot claim the deduction for any month you were eligible to participate in a health plan subsidized by your employer, your spouse's employer, or the employer of your dependant or qualifying child. Eligibility is what matters, not whether you enrolled. This rule is applied month by month, so a mid-year job change affects only the relevant months.

The net earnings limit

The deduction cannot exceed your earned income from the business under which the plan is established, reduced by certain items such as the deductible part of self-employment tax and retirement plan contributions. Form 7206 calculates this. If you have more than one business and plan, the instructions require a separate Form 7206 for each.

Marketplace plans and the premium tax credit

If you buy coverage through the Marketplace and receive advance payments of the premium tax credit, the deduction and the credit affect each other: the deduction lowers your income, which can increase the credit, and the credit reduces the premiums you can deduct. The instructions point to special calculations when advance payments were made or you claim the credit. Tax software handles this; doing it by hand is complex. The guide to the premium tax credit explains the credit itself.

Where to claim it

The deduction is an adjustment to income on Schedule 1 of Form 1040, figured on Form 7206. It is not a business expense on Schedule C for a sole proprietor's own coverage. It therefore:

• reduces income subject to income tax
• does not reduce self-employment tax

HSAs and other coverage

Contributions to a health savings account are a separate deduction. You generally cannot pay health insurance premiums from an HSA, with some exceptions. See HSA for the self-employed.

Records to keep

• premium statements and proof of payment
• Form 1095-A if you had Marketplace coverage
• notes on any months of employer plan eligibility
• Form 7206

Common mistakes

• claiming months when a spouse's employer plan was available
• claiming the deduction when the business had a loss
• entering premiums on Schedule C instead of Schedule 1
• forgetting to coordinate with advance premium tax credits

For choosing coverage, see Marketplace health insurance.

Get help with the interaction

If you also claim the premium tax credit, the calculations interact. Tax software or a tax professional can work through both together.

For the 2026 tax year, self-employed people with a net profit can generally deduct health, dental and qualifying long-term care premiums for their family on Form 7206, except for months they could join a subsidised employer plan, and only up to their net earnings.