Is self-employed health insurance considered a below-the-line deduction?

Self-employed health insurance is not considered a below-the-line deduction; rather, it is classified as an above-the-line deduction. This means that it is subtracted from gross income to arrive at adjusted gross income (AGI), which can ultimately reduce overall taxable income.

Above-the-line deductions, such as self-employed health insurance costs, can be beneficial because they are available to all taxpayers regardless of whether they itemize their deductions or take the standard deduction. This is particularly relevant for self-employed individuals, as it helps to lower their tax liability directly on their income before calculating the AGI.

In contrast, below-the-line deductions are typically related to itemized deductions, which are taken after calculating AGI, and include items such as mortgage interest, state and local taxes paid, and charitable contributions. These deductions require itemizing and can only be claimed by taxpayers who opt out of the standard deduction.

Understanding this classification helps clarify how self-employed health insurance premiums can impact overall tax calculations and why they are advantageous for reducing taxable income.