Healthcare Tax Equity for the Self-Employed

While small business owners are able to deduct the costs of healthcare from their annual income, the tax code still prevents entrepreneurs from deducting these costs from the wage base for self-employment taxes (Social Security and Medicare). This means entrepreneurs are treated differently than Americans who receive their healthcare from a corporation -- they are forced to pay additional taxes simply because they are self-employed.  According to an NFIB Member Ballot, nearly 90 percent of NFIB members believe individuals should be able to deduct 100 percent of the cost of health-insurance premiums from their taxes.

In 2010, Congress passed The Small Business Jobs & Credit Act (H.R. 5297) that would temporarily address the current inequality in the tax code.  Under this law, the self-employed will be allowed to take a one-year tax deduction for health costs in determining self-employment tax. This deduction is available for health insurance costs paid by self-employed business owners in 2010. These owners can take advantage of this deduction when preparing their 2010 tax filing.

NFIB will continue to fight to ensure that healthcare costs truly are fully deductible for self-employed individuals, as they are for other American workers.

NFIB is a member of the Coalition Supporting Equity for our Nation's Self-Employed, a coalition of small-business organizations committed to ensuring that self-employed individuals' healthcare costs receive fair and equal treatment by the tax code.