Are Health Insurance Premiums Tax Deductible in 2025? A Complete Guide for the USA
Health insurance is a crucial expense for individuals and families in the U.S. But a common question is: Are health insurance premiums tax deductible in 2025? The answer depends on several factors, including your employment status, income, and how you pay for your health coverage.
In this guide, we’ll break down who can deduct health insurance premiums, how much you can deduct, and what the IRS rules say for 2025.
Are Health Insurance Premiums Tax Deductible in 2025?
✅Yes, but only under certain conditions.
The IRS allows individuals to deduct health insurance premiums as a medical expense, but only if your total medical expenses exceed 7.5% of your adjusted gross income (AGI) and you itemize deductions on your tax return.
📌Key Rule: If you take the standard deduction instead of itemizing, you CANNOT deduct health insurance premiums.
Who Can Deduct Health Insurance Premiums?
You may be able to deduct health insurance premiums if:
✔️You’re Self-Employed – If you run a business, you can deduct 100% of your health insurance premiums without needing to meet the 7.5% AGI threshold.
✔️You Pay for Your Own Health Insurance – If you buy insurance out of pocket (not through an employer), your premiums can be deductible.
✔️Your Medical Expenses Exceed 7.5% of AGI – If your total medical costs, including insurance, are more than 7.5% of your annual income, you can deduct the excess amount.
❌You CANNOT Deduct Premiums If:
🚫 Your employer pays for your health insurance.
🚫 You use pre-tax dollars (like through an employer-sponsored plan).
🚫 You take the standard deduction instead of itemizing.
How to Deduct Health Insurance Premiums on Taxes in 2025
1️⃣ Calculate Your Adjusted Gross Income (AGI)
Your AGI is your total income minus adjustments like retirement contributions or student loan interest.
2️⃣ Determine Your Total Medical Expenses
Add up all qualified medical expenses, including:
- Health insurance premiums (if eligible)
- Doctor visits and hospital bills
- Prescription medications
- Dental and vision care
- Long-term care insurance
3️⃣ Compare to the 7.5% AGI Rule
If your total medical expenses exceed 7.5% of your AGI, you can deduct the excess amount.
📌Example:
- Your AGI = $50,000
- 7.5% of AGI = $3,750
- Your medical expenses = $6,000
- You can deduct $2,250 ($6,000 - $3,750).
4️⃣ Itemize Deductions on Schedule A
To claim the deduction, you must itemize using IRS Form Schedule A instead of taking the standard deduction.
Special Deduction for Self-Employed Individuals
If you are self-employed, you can deduct 100% of your health insurance premiums as a business expense, even if you don’t itemize.
🚀Key Benefits for Self-Employed Individuals:
✔️ Deduct premiums for yourself, spouse, and dependents.
✔️ No need to meet the 7.5% AGI threshold.
✔️ Deduct directly from gross income (above-the-line deduction).
💡 Tip: If your business operates at a loss, you cannot take this deduction.
What Types of Health Insurance Premiums Are Deductible?
✔️ Marketplace health plans (ACA/Obamacare)
✔️ COBRA continuation coverage
✔️ Medicare Part B & D premiums
✔️ Medicare Supplement (Medigap) premiums
✔️ Long-term care insurance (subject to limits)
🚫Non-Deductible Premiums:
- Employer-sponsored plans (paid with pre-tax dollars)
- Life insurance premiums
- Supplemental policies (like AFLAC)
Can You Deduct Employer-Sponsored Health Insurance?
❌ No, if paid with pre-tax dollars – Most employer health plans are already deducted from your paycheck before taxes, so you cannot deduct them again.
✅ Yes, if paid with after-tax dollars – If you pay part of your employer-sponsored premiums out of pocket, that portion may be deductible.
Should You Itemize or Take the Standard Deduction?
For 2025, the standard deduction is:
- $14,600 for single filers
- $29,200 for married couples filing jointly
Since the standard deduction is high, many taxpayers won’t benefit from itemizing unless they have significant medical expenses, mortgage interest, or charitable donations.
Final Thoughts: Are Health Insurance Premiums Tax Deductible in 2025?
✅ Yes, if:
- You itemize deductions and medical expenses exceed 7.5% of AGI.
- You are self-employed (you can deduct 100%).
- You pay for your own health insurance (not through an employer).
🚫 No, if:
- Your employer pays your premiums with pre-tax dollars.
- You take the standard deduction.
📌Tax Tip: If unsure, consult a tax professional to maximize your deductions and lower your tax bill. 💰