💼 Business & Income Info
Schedule C net profit (or Schedule F / K-1 SE earnings)
Enter net SE profit (must be > 0 to qualify).
Schedule SE line 13 ÷ 2 (approx: net profit × 0.9235 × 0.153 ÷ 2)
Enter half SE tax (0 if unknown).
SEP-IRA, Solo 401k, SIMPLE, or Keogh contributions this year
Enter SE retirement contributions (0 if none).
Exclude months you were eligible for employer-subsidized coverage
Select qualifying months.
🩺 Qualifying Premiums Paid (Annual)
2026 IRS age-based LTC deduction limits
Select age for LTC limit.
Your marginal federal tax bracket for 2026
Select tax bracket.
Use 0 for TX, FL, WA, NV, WY, AK, SD, TN, NH (no income tax)
Enter state rate (0-15%).
Deductible Amount (Form 7206 / Schedule 1 Line 17)
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⚠️ Disclaimer: This calculator estimates your IRC §162(l) deduction based on inputs provided. Actual deductible amount requires Form 7206 and may differ if you receive ACA premium tax credits (circular calculation required). Does not constitute tax advice. Consult a CPA or enrolled agent for your specific situation, especially for S-corp shareholders and ACA credit coordination.
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Sources & Methodology
Deduction formula per IRC §162(l). LTC limits per 2026 IRS Rev. Proc. Net profit cap method per Form 7206 instructions. SE tax treatment per IRC §1402 and §164(f).
IRS Form 7206 — Self-Employed Health Insurance Deduction Instructions
Official IRS instructions for calculating and reporting the SEHI deduction on Schedule 1, Line 17. Form 7206 replaced the Pub. 535 worksheet starting 2023. Covers net profit cap calculation, monthly eligibility rules, Medicare premium inclusion, LTC age-based limits, and ACA credit coordination.
IRC §162(l) — Health Insurance Costs of Self-Employed Individuals
Statutory authority for the deduction. §162(l)(1)(A) allows 100% deduction for qualifying premiums. §162(l)(2)(A) establishes the net earned income cap. §162(l)(2)(B) disallows the deduction for months eligible for employer-subsidized coverage. Deduction is not available for years with net loss.
Calculation Methodology (Form 7206 simplified):
Step 1: LTC deductible = min(LTC premiums paid, age-based annual limit)
Step 2: Total qualifying premiums = health + dental + vision + Medicare + LTC deductible
Step 3: Prorate for partial year = Total × (qualifying months / 12)
Step 4: Net profit cap = net SE profit - (half SE tax) - SE retirement contributions
Step 5: Deductible amount = min(prorated premiums, net profit cap)
Step 6: Tax savings = deductible amount × (federal bracket rate + state rate)
Note: Does not include ACA premium tax credit coordination (Form 7206 iterative method).
Does not reduce SE tax — only reduces federal and state income tax.
Step 1: LTC deductible = min(LTC premiums paid, age-based annual limit)
Step 2: Total qualifying premiums = health + dental + vision + Medicare + LTC deductible
Step 3: Prorate for partial year = Total × (qualifying months / 12)
Step 4: Net profit cap = net SE profit - (half SE tax) - SE retirement contributions
Step 5: Deductible amount = min(prorated premiums, net profit cap)
Step 6: Tax savings = deductible amount × (federal bracket rate + state rate)
Note: Does not include ACA premium tax credit coordination (Form 7206 iterative method).
Does not reduce SE tax — only reduces federal and state income tax.
Self-Employed Health Insurance Deduction Guide 2026 (IRC §162(l))
The self-employed health insurance deduction is one of the most valuable above-the-line deductions available to freelancers, sole proprietors, and business owners. Under IRC Section 162(l), you can deduct 100% of health, dental, vision, Medicare, and qualified long-term care insurance premiums from your adjusted gross income — even if you take the standard deduction. For a self-employed person in the 22% tax bracket paying $800/month in premiums, this deduction saves approximately $2,112 in federal income taxes every year.
The Net Profit Cap — The Rule Most People Miss
Net Profit Cap = Net SE Profit − (Half of SE Tax) − SE Retirement Contributions
Deductible Amount = min(Total Qualifying Premiums, Net Profit Cap)
Source: IRC §162(l)(2)(A), Form 7206 Instructions
There is no fixed dollar limit — the cap equals your adjusted net self-employment income. If you earned $50,000 net, your maximum deduction is approximately $46,000 after the SE tax and retirement deductions. Most people's premiums are well under this cap, so they deduct 100% of premiums.
There is no fixed dollar limit — the cap equals your adjusted net self-employment income. If you earned $50,000 net, your maximum deduction is approximately $46,000 after the SE tax and retirement deductions. Most people's premiums are well under this cap, so they deduct 100% of premiums.
2026 Long-Term Care Premium Deduction Limits (Per Person)
| Age at Year-End | 2026 LTC Deduction Limit | Typical Annual Premium |
|---|---|---|
| Age 40 or under | $480 | $500-$1,500 |
| Ages 41-50 | $900 | $1,000-$2,500 |
| Ages 51-60 | $1,790 | $2,000-$4,000 |
| Ages 61-70 | $4,770 | $3,000-$6,000 |
| Age 71 or older | $5,960 | $4,000-$8,000 |
What Qualifies and What Doesn't
| Premium Type | Deductible? | Notes |
|---|---|---|
| Medical insurance | Yes | For self, spouse, dependents, children under 27 |
| Dental insurance | Yes | Fully deductible, often overlooked |
| Vision insurance | Yes | Fully deductible, often overlooked |
| Medicare Part B & D | Yes | Deductible per IRS guidance; Part B = $185/mo standard 2026 |
| Qualified LTC insurance | Yes (limited) | Subject to age-based annual caps above |
| COBRA premiums | Yes | If no employer plan available those months |
| ACA premium tax credit portion | No | Only deduct what you paid out-of-pocket |
| Months eligible for employer plan | No | Disqualified for those months |
Stack the SEHI Deduction with HSA Contributions
If you are enrolled in a qualifying High-Deductible Health Plan (HDHP), you can also contribute to a Health Savings Account (HSA) as a completely separate additional deduction. The 2026 HSA contribution limits are $4,300 for self-only coverage and $8,550 for family coverage. The HSA deduction is on Schedule 1, Line 13 — separate from the SEHI deduction on Line 17. Combined, a family paying $9,600/year in premiums and contributing $8,550 to an HSA saves approximately $3,993 in federal income taxes at the 22% bracket.
💡 Key point: The SEHI deduction reduces your AGI and federal income tax but does NOT reduce your self-employment tax. You still pay 15.3% SE tax on your full Schedule C net profit. This is different from business expenses on Schedule C, which reduce both income tax AND SE tax.
Frequently Asked Questions
Sole proprietors with Schedule C net profit; partners with SE earnings from Schedule K-1; LLC members taxed as sole proprietors or partnerships; and S-corp shareholders owning more than 2%. You must have net profit — no deduction in a loss year. Disqualified for any month eligible for employer-subsidized coverage through your own or spouse's employer.
Your deduction cannot exceed net SE profit minus the half-SE-tax deduction minus SE retirement plan contributions. If adjusted net profit is $60,000 and premiums are $15,000, you can deduct the full $15,000. If adjusted net profit is $10,000 and premiums are $15,000, deduction is capped at $10,000. There is no fixed dollar maximum otherwise.
Medical, dental, vision for self, spouse, dependents, and children under 27; Medicare Part B and D; qualified LTC insurance up to age-based limits; and COBRA premiums. Cannot deduct the portion of Marketplace premiums covered by ACA premium tax credits.
Age 40 or under: $480. Ages 41-50: $900. Ages 51-60: $1,790. Ages 61-70: $4,770. Age 71+: $5,960. These limits apply per person — if both spouses have LTC policies, each can claim their own age-based limit separately.
No. The SEHI deduction reduces your federal and state income tax (above-the-line AGI reduction on Schedule 1 Line 17) but does NOT reduce your SE tax liability. SE tax is still calculated on your full Schedule C net profit. Business expenses on Schedule C DO reduce SE tax — this deduction does not.
The deduction applies month-by-month. You can only claim it for months when you had SE income and were not eligible for an employer-subsidized plan. Prorate by multiplying annual premiums by (qualifying months / 12). If you had employer coverage for 6 months and were self-employed for 6 months, only 6/12ths of your premiums qualify.
Use IRS Form 7206 (Self-Employed Health Insurance Deduction) — this replaced the old Pub. 535 worksheet starting in 2023. The result goes to Schedule 1 (Form 1040), Line 17. If you receive ACA premium tax credits, Form 7206 includes coordination instructions for the iterative calculation.
Yes, but only the portion you paid out-of-pocket — not the amount covered by ACA advance premium tax credits (APTC). If you receive APTCs, the coordination calculation on Form 7206 determines your exact deductible amount. The interaction is circular: your deduction affects MAGI, which affects your PTC eligibility. Form 7206 provides two methods to handle this.
Yes. Medicare Part B and D premiums qualify for the SEHI deduction even though Medicare is a government program. The 2026 standard Medicare Part B premium is $185.00/month per person. If you and your spouse both have Medicare, both sets of premiums count. IRS Form 7206 instructions confirm this treatment.
Yes, for shareholders owning more than 2%. The S-corp must pay or reimburse the premiums AND include the amount in the shareholder's W-2 wages as additional compensation. The shareholder then deducts it on Schedule 1 of their personal 1040. Skipping the W-2 step disqualifies the entire deduction — a common mistake.
Yes — if you are on a qualifying HDHP, you can contribute to an HSA (separate additional deduction on Schedule 1 Line 13). 2026 HSA limits: $4,300 individual / $8,550 family. The SEHI deduction and HSA deduction are fully separate — claim both to maximize tax savings.
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