Self-Employed Health Insurance Deduction in Texas
Self-employed Texans who purchase their own health, dental, or qualifying long-term care insurance can deduct 100% of those premiums as an above-the-line adjustment on their federal income tax return for 2025. The deduction is not limited to itemizers and directly lowers adjusted gross income, which can also reduce exposure to the self-employment tax calculation.
Texas has no state personal income tax, so the self-employed health insurance deduction applies only at the federal level for Texas residents. While there is no state tax benefit to capture, the federal deduction alone can be substantial for self-employed individuals paying full individual or family market-rate premiums.
Texas freelancers, independent contractors, and small business owners should retain annual premium invoices and any Form 1095-A from the federal marketplace to substantiate the deduction. Coverage purchased for a spouse and dependents is also deductible, making this one of the most accessible and impactful deductions for Texas's growing self-employed population.