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Health Insurance Tax Deductions for the Self-Employed in Tennessee
If you're self-employed in Tennessee, your health premiums are one of the best deductions you have — and most people claim it wrong or not at all.
The self-employed health insurance deduction
You can deduct 100% of premiums for medical, dental and vision coverage for yourself, your spouse and dependents, as an adjustment to income (above the line). It applies whether you buy on HealthCare.gov or a private plan. The limit is your net self-employment income from the business.
Tennessee state taxes
Tennessee has no state income tax, so the only lever on a health premium is the premium itself.
The subsidy interaction
Because the deduction lowers your adjusted gross income, it can also lower the income used to calculate your marketplace subsidy — which can push you under the 400% cliff. It's circular (the deduction depends on the subsidy, which depends on the deduction); tax software handles the iteration, but it's worth planning with a CPA if you're close to the line.
Three mistakes we see
Deducting premiums the business reimbursed (double dipping). Forgetting that a spouse's employer coverage eligibility disqualifies the deduction for the months it was available. And paying premiums personally from an S-corp instead of running them through payroll, which is how S-corp owners have to do it.
HSA on top
If you choose an HSA-eligible plan — several private plans in Tennessee qualify — you can also deduct HSA contributions ($4,400 individual / $8,750 family in 2026). That's two deductions stacked on one premium.
Not tax advice — confirm with your CPA. For the insurance half, check your options.