7 Insurance Premiums You Didn’t Know Were Tax Deductible

You may be able to deduct multiple types of insurance premiums from your taxes, including the amount you spend on car insurance, home insurance, health insurance, life insurance and more. These insurance premiums are not tax deductible in all situations, however, as 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 insurance deductions for taxes, including what types of coverage you can write off and how you can know if you are eligible.

Are Insurance Premiums Tax Deductible if I’m Self-Employed?

If you are self-employed, you may have numerous tax-deductible insurance premiums, such as payments for auto insurance, health insurance, commercial insurance and more. In fact, homeowners insurance premiums are only tax deductible if you are self-employed or otherwise use your home for commercial purposes. The below sections will go over the specific requirements for deducting certain types of insurance costs, even if you aren’t self-employed.

What Types of Insurance Premiums Are 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 deductible insurance premiums.

1. Home Insurance

Home insurance premiums are tax deductible if you are your own boss and you regularly use part of your home or another structure on your property exclusively as your main workspace. This home-based business deduction also applies to other household expenses, like mortgage interest, utilities and maintenance.^[1]

There are two ways to calculate your insurance deductions for taxes if you have a home office:^[1]

1. Regular method: This method involves keeping track of the amount of money you spend on deductible household 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 writing off that percentage of your home expenses on your taxes.
2. 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 landlord insurance premiums and other expenses related to maintaining a rental property from your federal taxes. However, if the property is a vacation home that you personally use for part of the year, you must calculate the percentage of the year that you rent out the home and only deduct that percentage of your rental property expenses on your tax return.^[2]

2. Car Insurance

Vehicle expenses like gasoline, car repairs and car insurance premiums are tax deductible for self-employed people, military reservists, qualified performing artists and fee-basis government officials who use their vehicles for business purposes.^[3]

You can also deduct your car expenses if you use your vehicle for medical or charitable purposes or if you’re an active-duty service member using your car to move.[4]

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:^[3]

1. Actual expenses method: This method involves keeping track of the exact amount of money you spend on commercial auto 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 of your premiums 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 of money per mile, regardless of your actual expenses. If you operate a fleet of at least five vehicles or have claimed certain depreciation deductions for your commercial vehicle, you are not eligible for the standard mileage rate deduction. The below table goes over the standard mileage rates for the 2024 and 2025 tax years.^[4]

3. Life Insurance

Generally, life insurance premiums are tax deductible only if you donate the policy to a qualified charitable organization. Even then, you can’t write off your premiums if the charity has to pay any of the premiums and the policy lists you, a family member or someone else you have directly chosen as a beneficiary. For example, you may not be able to write off your share of the premiums after donating a life insurance policy to a nonprofit if your brother works there and his children are named as beneficiaries of the policy.^[5]

4. Health Insurance

Anyone can deduct health insurance premiums, hospital bills, prescription drug costs and other out-of-pocket qualified medical expenses from their taxes as long as the sum of their unreimbursed expenses is greater than 7.5% of their adjusted gross income (AGI).^[6] That said, you are only allowed to deduct the amount that exceeds 7.5% of your AGI, so if your AGI is $80,000 and your medical expenses for the tax year total $8,000, you’d only be able to deduct $2,000.

This includes Medicare premiums but generally doesn’t include employer-sponsored health insurance 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.^[7]

Self-employed individuals operating at a net profit can deduct medical expenses and health insurance premiums in full, although this out-of-pocket expenses deduction does not apply to any months when you are eligible for coverage through your own employer or a company that employs your spouse or your dependent under the age of 27.^[8] Meanwhile, if you have a health savings account (HSA) to supplement your health insurance coverage, you can write off any contributions you personally make to the HSA.^[9]

5. Workers’ Compensation/Unemployment Insurance

In general, workers’ compensation insurance is among the types of coverage that business owners can write off on their taxes. Meanwhile, unemployment insurance functions a bit differently since it is a government benefit funded by taxes paid by employers rather than a private policy funded by premiums. Nevertheless, any contributions you are required to make to your state’s unemployment benefit fund are also tax deductible if they are officially classified as taxes under state law.^[10]

6. Business Insurance

There are several other types of commercial insurance that small business owners are allowed to write off on their taxes, such as the following:^[10]

• Fire, theft, flood and other types of commercial property insurance
• Credit insurance
• Group health and long-term care insurance for employees
• Liability insurance
• Malpractice insurance
• Business overhead expense insurance
• Life insurance for employees (as long as your business is not a beneficiary of the policy)
• Business interruption insurance

7. Disability Insurance

The amount you pay for a private disability insurance policy is not tax deductible. Conversely, a business owner can deduct the premiums for an insurance policy that covers their employees’ lost wages if they must miss work due to an illness or disability, but an employer can’t deduct the premiums for a policy that covers their own lost wages.^[11][10]

Other Qualifying Insurance Plans

Dental insurance premiums and other dental expenses are tax deductible in the same way as medical expenses. Long-term care insurance premiums are also tax deductible, but the amount you can write off depends on your age. See the below table for a rundown of how much of your long-term care insurance premiums you can deduct at various age ranges.^[7]