What Types of Insurance Premiums Are Tax Deductible?

You may be able to deduct various types of insurance premiums from your taxes including the amount you pay for car insurance, home insurance, health insurance, life insurance and more. However, these premiums are not universally tax deductible. Rather, you must meet certain requirements to qualify for an insurance premium tax deduction such as buying a policy that serves a business purpose.

Keep reading to learn more about when insurance premiums are tax deductible including what types of coverage you can write off and how you can know if you are eligible.

Key Takeaways Auto insurance is tax deductible if you use your car for business, charity, medical or military moving purposes. Homeowners insurance is tax deductible if you are self-employed and have a home office or own a rental property. You may be able to deduct health insurance costs from your taxes if you are self-employed or if your deductible medical expenses are higher than 7.5% of your adjusted gross income. In general, individuals can only deduct life insurance premiums if they donate the policy to a charity and neither they nor their family members are beneficiaries of the policy. Business owners can deduct numerous types of insurance premiums including liability, property and worker’s compensation insurance.

Can I Deduct My Insurance Premiums if I’m Self-Employed?

Multiple types of insurance are predominantly tax deductible for self-employed individuals such as auto insurance, homeowners insurance and health insurance. The below sections will go over the specific requirements for deducting certain types of insurance premiums and when you are allowed to deduct insurance costs even if you aren’t self-employed.

When Are Insurance Premiums Tax Deductible?

Each major type of insurance has its own stipulations set by the Internal Revenue Service (IRS) regarding when you can deduct the amount you pay in premiums from your federal tax return. Continue reading for a breakdown of the rules associated with several types of tax-deductible insurance premiums.

Car Insurance

Car insurance premiums are tax deductible along with other vehicle expenses like gasoline and car repairs for self-employed people, military reservists, qualified performing artists and fee-basis government officials who use their vehicles for business purposes.^[1]

If you use an employer-provided car to conduct commercial activities but don’t fit into any of those categories, then your vehicle expenses are only tax deductible if your employer doesn’t reimburse you for them. For example, you can’t write off commercial auto insurance on your taxes if your employer pays the premiums or if you pay the premiums but your employer pays you back.^[2]

You can also deduct your vehicle expenses if you use your car for medical or charitable purposes or if you’re an active-duty service member using your car to move.[3] If you are eligible for a car insurance tax deduction, you have two options for deciding how much money to subtract from your taxable income:

• Actual expenses method: This method involves keeping track of the exact amount of money you spend on car insurance and other vehicle maintenance expenses during the tax year and deducting that amount from your taxes. If you use the same car for both business and personal purposes, then you must calculate the percentage of the time you spend driving that relates to your business and only deduct that percentage from your taxes.^[2]
• Standard mileage rate method: This method involves keeping track of the number of miles you drive for a qualified tax-deductible purpose during the tax year and deducting a set amount per mile established by the IRS regardless of your actual expenses. The below table goes over the standard mileage rates for the 2023 and 2024 tax years.^[3]

Vehicle Use	2023 Standard Mileage Rate	2024 Standard Mileage Rate
Business use	65.5 cents per mile	67 cents per mile
Military moving use	22 cents per mile	21 cents per mile
Medical use	22 cents per mile	21 cents per mile
Charity use	14 cents per mile	14 cents per mile

Homeowners Insurance

Similarly, homeowners insurance premiums are tax deductible along with other expenses related to maintaining your home if you are self-employed and regularly use part of your home or another structure on your property exclusively as your main workspace. There are two ways to calculate your insurance deductions for taxes if you have a home office:^[4]

• Regular method: This method involves keeping track of the amount of money you spend on insurance, utilities and other home maintenance expenses during the tax year, calculating the percentage of your home that is devoted to business use by comparing the square footage of your home office to the square footage of your entire home and deducting that percentage of your home expenses from your taxes.
• Simplified option: This method involves figuring out the square footage of your home office or any other portion of your property that you exclusively use for business purposes and deducting $5 per square foot up to $1,500 regardless of your actual expenses.

In addition, you can deduct 100% of your landlord insurance premiums and other expenses related to maintaining a rental property unless the property is a vacation home that you personally use for part of the year. In this case, you must calculate the percentage of the year that you rent out the home at a fair rental price and only deduct that percentage of your rental property expenses on your tax return.^[5]

Health Insurance

If you are self-employed, your health insurance premiums are tax deductible in full as long as your business has a net profit for the year and neither you nor your spouse is eligible for an employer-sponsored health plan at any point during the year.^[6][7]

Otherwise, you can deduct health insurance premiums and other medical expenses like out-of-pocket health care costs that exceed 7.5% of your adjusted gross income.^[6] This includes Medicare premiums but generally doesn’t include employer-sponsored health insurance expenses since your share of the premium payment is usually subtracted from your paycheck on a pre-tax basis, meaning it isn’t ever part of your gross income.^[8]

Life Insurance

You may be able to deduct life insurance premiums from your taxes if you designate a qualified charity as both the owner and beneficiary of the life insurance policy.^[9] However, these premiums aren’t tax deductible if the charity ends up paying any premiums and you or any of your family members end up as beneficiaries of the policy.^[10]

For example, you may not be able to write off your share of the premiums after donating a life insurance policy to a charitable organization if your brother works there and his children are named as beneficiaries of the policy.

Business Insurance

Since individuals can only write off insurance premiums for policies that serve a business purpose in many cases, it naturally follows that small business owners are allowed to write off numerous types of commercial insurance premiums. Specifically, the following types of business insurance are tax deductible:^[11]

• Fire, theft, flood and other types of commercial property insurance
• Credit insurance covering losses related to bad debts
• Group health and long-term care insurance for employees
• Liability insurance
• Malpractice insurance
• Workers’ compensation insurance
• Contributions to state unemployment insurance funds
• Business overhead expense disability insurance
• Commercial auto insurance
• Life insurance for employees (only if your business is not a beneficiary of the policy)
• Business interruption insurance

Other Qualifying Insurance Plans

Dental expenses including dental insurance premiums are tax deductible in the same way as medical expenses.^[6] Meanwhile, long-term care insurance premiums are also tax deductible for individuals but the amount you can deduct depends on your age. See the below table for a rundown of the amount of your long-term care insurance premiums that you can deduct at various age ranges.^[8]

Age	Maximum Deduction
40 or under	$480
41 to 50	$890
51 to 60	$1,790
61 to 70	$4,770
71 or over	$5,960