Owner Health Insurance Tax Savings Estimator
See roughly how much tax the owner’s health insurance saves under each business structure. Enter your premium, your business earnings and your tax rates.
Estimate your owner tax savings
Enter the premium paid for you and your family, your business earnings and your tax rates.
Pick the closest match. Your CPA confirms the final treatment.
The full-year cost of the owner’s own coverage.
Net self-employment earnings, or W-2 wages from the S corporation. The deduction cannot exceed this.
Your marginal bracket.
Michigan’s flat rate is a reasonable starting point.
Your estimate
This estimate is general information, not tax advice. The deduction is limited to months you were not eligible for a subsidized employer plan, and rules vary by entity and by year. Talk to your CPA.
What the Estimate Assumes
C Corporation Owner-Employees
The premium is employer-paid and excluded from income and payroll tax under IRC §106. See C Corporation Owners.
S Corporation Owners
The premium is reported as wages and deducted by the owner on the return, subject to the earnings limit. See S Corporation Owners With More Than 2 Percent.
Sole Proprietors and Partners
The owner deducts the premium as a self-employed individual, limited to business earnings. See Sole Proprietors and Partners and LLC Members.
Estimator Questions
Why is payroll tax zero for most owners?
The deduction lowers income tax only. A C corporation owner-employee is the exception because the premium is excluded from wages.
What if I was eligible for my spouse’s plan?
Months in which you or your spouse could join a subsidized employer plan generally do not qualify for the self-employed health insurance deduction. Count only qualifying months.
Does this include the business’s own deduction?
No. For the employer side, see Business Tax Deduction for Group Health Premiums.
Is this tax advice?
No. CFH are licensed insurance brokers, not tax advisors. This page is general information, not tax advice, so confirm your situation with your CPA or tax advisor. Our clients also have access to CPAs and attorneys through the firm.
Laws and Rules Referenced
IRC §162 · IRC §106 · IRC §1372 · Instructions for Form 7206 · IRS Notice 2008-1 · Publication 15-B
Related guides and tools.
Free Employer Benefits Tools
The full set of free calculators for employers.
Business Owner Health Insurance Tax Guides
Every owner tax guide in one place.
Tax Benefits of Group Health Insurance for Owners
The overview of how each owner type is taxed.
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