Are Medicare Premiums Tax Deductible for Self-Employed?

Yes. Medicare premiums are tax deductible for self-employed people, claimed as an above-the-line adjustment to income under Internal Revenue Code Section 162(l). You take it on Schedule 1 of Form 1040, it lowers your adjusted gross income directly, and it works whether you itemize or take the standard deduction. The deduction is capped at your net self-employment profit and is not available for any month you were eligible for a subsidized employer health plan through your own or your spouse’s job.

The standard Medicare Part B premium is $202.90 per month in 2026, and Part D, Medigap, or Medicare Advantage premiums stack on top, so the annual figure often runs into thousands.1Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles Claimed correctly, this deduction moves that whole cost off your taxable income.

Who Can Take the Deduction

Two conditions govern eligibility. You need net earnings from self-employment, and you cannot have been eligible for a subsidized health plan through any employer during the months you want to claim.2Office of the Law Revision Counsel. 26 U.S. Code 162 – Trade or Business Expenses

The deduction is available to sole proprietors reporting on Schedule C, partners in a partnership, LLC members taxed as partners, and S corporation shareholders who own more than 2% of the company. The health insurance must be established under the trade or business generating the income. S corporation shareholders follow a different reporting path, covered below.

The subsidized-plan rule is evaluated month by month. Eligibility alone disqualifies you, even if you never enrolled, and coverage available through a spouse’s employer counts the same way. Keep records of when any employer coverage was offered to you or your spouse.3Office of the Law Revision Counsel. 26 USC 162 Trade or Business Expenses

The deduction is also capped at your net profit from the business tied to the insurance. If the business breaks even or loses money, the deduction is zero for that year and cannot create or enlarge a loss.3Office of the Law Revision Counsel. 26 USC 162 Trade or Business Expenses

Which Medicare Premiums Qualify

Most premiums tied to Medicare count:

If your income triggers the Income-Related Monthly Adjustment Amount, the IRMAA surcharge is treated as part of your Part B or Part D premium and is deductible along with the base amount.

Long-Term Care Premiums Have Their Own Caps

Qualified long-term care insurance premiums also qualify, but only up to age-based annual limits. For 2026, per person:

  • Age 40 or younger: $500
  • Age 41 to 50: $930
  • Age 51 to 60: $1,860
  • Age 61 to 70: $4,960
  • Over age 70: $6,200

If you’re including long-term care premiums, use Form 7206 rather than the simpler worksheet.5Internal Revenue Service. Instructions for Form 7206 (2025)

How the Deduction Affects Your Tax Bill

Because this is an above-the-line adjustment, it reduces your adjusted gross income dollar-for-dollar starting with the first premium paid.5Internal Revenue Service. Instructions for Form 7206 (2025) That’s a stronger position than deducting medical expenses on Schedule A, where only the portion above 7.5% of AGI counts and only if you itemize. Here, standard-deduction filers get the full benefit.

One boundary to know: the deduction lowers your federal income tax but does not lower your self-employment tax. Net earnings for Social Security and Medicare tax purposes are figured before this deduction.5Internal Revenue Service. Instructions for Form 7206 (2025) The reduction in AGI can still ripple into other calculations tied to AGI, including how much of your Social Security is taxable and future IRMAA tiers.

How to Calculate and Claim It

You have two calculation tools. For a single self-employment income source with straightforward coverage, use the Self-Employed Health Insurance Deduction Worksheet in the Form 1040 instructions. Use Form 7206 instead if any of the following apply:

  • You have more than one source of self-employment income.
  • You file Form 2555 for foreign earned income.
  • You are including qualified long-term care premiums.

Either way, the result goes on Schedule 1 (Form 1040), line 17, and flows to your Form 1040 as a reduction to AGI.5Internal Revenue Service. Instructions for Form 7206 (2025)

Before filing, pull together:

If You’re a More-Than-2% S Corporation Shareholder

The path is different but the deduction is available. The S corporation must pay or reimburse your Medicare premiums and report the amount as wages on your Form W-2. Those amounts appear in Box 1 but are excluded from Boxes 3 and 5, so they’re subject to income tax but not FICA. Once the premiums are reported correctly on the W-2, you claim the above-the-line deduction on Schedule 1 like any other self-employed taxpayer. Pay premiums out of pocket without running them through the corporation’s payroll and you lose the deduction. The subsidized-plan disqualification applies here too.7Internal Revenue Service. S Corporation Compensation and Medical Insurance Issues

When Your Premiums Are More Than Your Net Profit

The above-the-line deduction stops at your net self-employment income. Anything above that isn’t lost automatically. You can carry the excess to Schedule A as an itemized medical expense, where it’s deductible to the extent your total medical costs exceed 7.5% of AGI.8Internal Revenue Service. Topic No. 502, Medical and Dental Expenses Subtract the amount already claimed on Schedule 1 from your Schedule A medical total so you don’t count the same premiums twice. This split only helps if itemizing beats your standard deduction and your medical expenses clear the 7.5% floor.