Self-Employed Health Insurance (SEHI) Deduction Simulator
Calculate and maximize your tax benefits for tax year 2025.
1. Enter Basic Information
2. Enter Annual Health-Related Costs
3. Premium Tax Credit (PTC) Interaction
Enable this if you have a Marketplace plan and receive the PTC. The simulator will find the optimal deduction using an iterative calculation.
Simulation Results
SE Health Insurance (SEHI) Deduction
$0
Premium Tax Credit (PTC)
$0
HSA Deduction
$0
Key Rules & Strategies
Core Principle of the SEHI Deduction
This is a powerful "above-the-line" deduction, meaning it reduces your Adjusted Gross Income (AGI) regardless of whether you itemize. A lower AGI can help you qualify for other tax benefits. It covers medical, dental, vision, qualified LTC, and Medicare premiums.
Key Limitations: Net Profit & Spouse's Plan
Net Profit Limit: The deduction cannot exceed the net profit from the business under which the insurance plan is established. A business loss for the year means no deduction for that business.
Employer Plan Eligibility: You cannot take the SEHI deduction for any month you were eligible to participate in a subsidized health plan offered by an employer (yours or your spouse's). Eligibility, not actual participation, is the key.
Deduction Method by Business Structure (S-Corp, Partnership)
S-Corporation (>2% Shareholder): The S-Corp must pay or reimburse the premium AND report it as wages in Box 1 of the shareholder's W-2. Failing to do so disqualifies the deduction. The deduction is limited by the W-2 wages, not business profit.
Partnership: When the partnership pays premiums for a partner, the amount is treated as a "guaranteed payment," which is reported as income on the partner's K-1. The partner then takes the deduction on their personal return based on this income.
Understanding the Circular Calculation with PTC
The SEHI deduction and the PTC affect each other. (1) The SEHI deduction lowers your AGI → (2) A lower AGI can increase your PTC → (3) A higher PTC reduces your out-of-pocket premium cost → (4) This lower premium cost reduces your allowable SEHI deduction. This simulator runs this complex calculation automatically to find the optimal result.