Small Business Insurance
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Is business insurance tax deductible?

Small business owners can typically deduct the cost of business insurance from their taxable income.

Which insurance premiums can be deducted?

According to the IRS Business Expenses guide, you can deduct the ordinary and necessary cost of insurance coverage as a business expense. That could include the following types of business insurance:

How to write off your business insurance premiums

Since the IRS considers business insurance a cost of doing business, your policy premiums can be deducted from your taxable income. You'll have to fill out some forms to take advantage of the deduction. A tax preparer can ensure you fill out the proper paperwork so that you don't pay too much in taxes or end up with fines for not paying enough.

You can deduct insurance premiums that benefit your business

Generally speaking, you can deduct your insurance premiums if those policies benefit the business and serve a business purpose. However, you may run into a gray area if you're a sole proprietor or independent contractor who wants to deduct health insurance premiums. In some situations, you may not be able to.

That's why we recommend you work with a tax professional. They know all the conditions that must be met when you file your taxes, whether you work solo or run an LLC or S corporation. Miscalculated deductions are usually a red flag for audits, which is why it's important to get it right the first time.

For worksheets that help you calculate deductions, you can turn to the Internal Revenue Service (IRS):

IRS Publication 535 was discontinued after the 2022 tax year.

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Certain insurance premiums cannot be deducted

There are some types of insurance premiums you usually can't deduct:

  • What you pay into a self-insured reserve (some big businesses use these reserves instead of carrying workers’ comp coverage)
  • Premiums on a disability insurance policy that covers your lost income
  • Premiums for loan protection insurance
  • Premiums on life insurance policies, even if it's for employees

Of course, when it comes to taxes and tax returns, nothing is written in stone. Be sure to talk over these items with your tax advisor if you have any questions.

Get insurance from trusted carriers with Insureon

Complete Insureon’s easy online application today to get small business insurance quotes from top-rated U.S. companies. You can also speak with a licensed insurance agent at any time. Once you find the right policy for your small business, you can begin coverage and receive a certificate of insurance (COI) in less than 24 hours.

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Updated: March 28, 2024
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