If you’re struggling with the high costs of healthcare, you may wonder if health insurance is tax deductible.
You typically can’t claim a medical expense deduction for health premiums if you get coverage through your employer; tax deductions are available for medical expenses for other out-of-pocket costs. To deduct medical expenses, you’ll need to itemize vs. taking the standard deduction.
There’s an exception for self-employed individuals, who can deduct health premiums even if they don’t itemize their returns.
The IRS rules for tax deductions on health costs can get complicated. We’ll walk you through what you need to know before you file your tax return.
How to deduct health insurance premiums and expenses
You can claim a medical expense deduction for unreimbursed healthcare costs that exceed 7.5% of your adjusted gross income (AGI). You’ll use Schedule A to itemize your deductions. You’ll then transfer the amount of your total deduction to IRS Form 1040.
However, itemizing won’t make sense for many taxpayers, even if they have relatively high healthcare costs. That’s because the Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction.
You’d only want to itemize if all your deductions add up to more than the standard deduction for the tax year. The following standard deduction rates apply for 2023 (use these numbers when you prepare your return that’s due on April 15, 2024):
- Single or married filing separately: $13,850
- Married filing jointly: $27,700
- Head of household: $20,800
If you’re not sure whether itemizing or taking the standard deduction makes the most sense, consult with a tax professional.
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