Medicare Part B premiums are tax deductible, but whether the deduction actually lowers your bill depends on how you earn your income. Self-employed filers can deduct the full annual premium directly from income without itemizing. Everyone else has to itemize on Schedule A and clear a floor equal to 7.5% of adjusted gross income, which most retirees never reach. The standard 2026 Part B premium is $202.90 a month, or $2,434.80 a year.
If You’re Self-Employed, You Deduct the Full Amount
Self-employed taxpayers get the better deal by a wide margin. If you report net profit from a business, you can deduct 100% of your Medicare Part B premiums as an adjustment to income on Schedule 1 of Form 1040. This is an above-the-line deduction, so it reduces your adjusted gross income directly. You don’t need to itemize, and the 7.5% floor doesn’t apply.
The deduction is available to sole proprietors, partners with net self-employment earnings, and S-corporation shareholders who own more than 2% of the company’s stock. Premiums for Parts A, C, and D, as well as Medigap, qualify under the same rule.
Two hard limits apply. The deduction can’t exceed net earnings from the business that sponsors the health coverage; if the business breaks even or loses money, you get no deduction. And you can’t claim it for any month you were eligible to participate in a subsidized health plan through any employer, including a spouse’s. Eligibility is the trigger, not enrollment.
You calculate the deduction on Form 7206, which flows to Schedule 1, line 17. Any premiums that exceed your earned-income cap can still go on Schedule A as an itemized medical expense, subject to the normal threshold. What you can’t do is claim the same premium dollars in both places.
S-corporation shareholders have an extra step. The corporation must either pay the premiums directly or reimburse you, and the amounts must appear as wages in Box 1 of your W-2. Miss that reporting and the deduction disappears. For S-corp shareholders, the deduction is also capped at wages received from the corporation rather than net business profit.
If You’re Not Self-Employed, You Have to Itemize
The IRS treats Part B premiums as a qualified medical expense. You combine them with other out-of-pocket medical costs and deduct the total on Schedule A, but only the portion of total medical spending that exceeds 7.5% of your adjusted gross income counts. Everything below that floor is nondeductible.
An example makes the math concrete. Say your AGI is $60,000. You’d need more than $4,500 in total medical expenses before a single dollar becomes deductible. If you paid $2,434.80 in Part B premiums and had $2,500 in other medical costs, your $4,934.80 total exceeds the floor by only $434.80. That $434.80 is your deduction, despite spending nearly $5,000.
Qualified expenses you can stack with Part B premiums include prescription drugs, dental work, hospital stays, vision care, copayments, and other Medicare premiums. The more medical spending you can document, the better your chance of clearing the floor.
Why the Standard Deduction Usually Wins
Even if your medical expenses clear 7.5% of AGI, itemizing only helps when your total itemized deductions exceed the standard deduction. For 2026, the standard deduction is $16,100 for single filers, $24,150 for heads of household, and $32,200 for married couples filing jointly.
Medicare-age filers get more. If you’re 65 or older, you qualify for an additional standard deduction of $2,050 for single filers or $1,650 per spouse for married filing jointly. A single filer over 65 has a standard deduction of $18,150, and a married couple where both spouses are 65 or older reaches $35,500. Your itemized deductions — medical expenses, state and local taxes, mortgage interest, charitable giving — have to top those amounts before itemizing changes your tax bill.
That’s why the medical expense deduction rarely produces a benefit for retirees. It tends to matter only in years with unusually heavy spending: a major surgery, an extended hospital stay, significant dental work.
Higher Premiums for Higher Incomes
Higher-income beneficiaries pay more through the Income-Related Monthly Adjustment Amount, or IRMAA. For 2026, the surcharge starts at modified adjusted gross income above $109,000 for individual filers or $218,000 for joint filers, based on your return from two years earlier. At the highest tier, the total monthly Part B premium reaches $689.90, or $8,278.80 a year.
The IRMAA surcharge counts as part of your Part B premium for tax purposes, so the full amount you pay qualifies as a deductible medical expense. Larger premiums also make it easier to clear the 7.5% AGI floor if you itemize. Self-employed filers can deduct the entire IRMAA-adjusted amount above the line.
Other Medicare Premiums Follow the Same Rules
Part B isn’t the only Medicare cost you can deduct.
- Part C (Medicare Advantage) premiums qualify as medical expenses, whether itemized or claimed through the self-employed deduction.
- Part D prescription drug premiums, including any IRMAA surcharge, qualify under the same rules.
- Medigap premiums are deductible medical expenses, and self-employed filers can include them above the line.
- Part A premiums are deductible if you pay them because you lacked sufficient work credits to qualify for premium-free Part A. The Medicare payroll taxes you paid during your working years are not deductible.
Paying Premiums With HSA Funds Instead
If you built a Health Savings Account balance before Medicare, you can use it to pay Part B, Part D, and Medicare Advantage premiums tax-free after age 65. The withdrawal counts as a qualified medical expense, so it avoids income tax and the 20% penalty that normally hits non-medical HSA distributions.
Medigap premiums are the exception. HSA funds used for Medigap are taxable as ordinary income, though the 20% additional penalty doesn’t apply after age 65.
You can’t double up. Premiums paid with tax-free HSA distributions can’t also be deducted on your return. For most retirees who take the standard deduction anyway, the HSA route delivers a guaranteed tax benefit, while the itemized deduction only pays off after clearing both the 7.5% floor and the standard deduction.
Documenting Premiums When You File
If your Part B premiums are withheld from Social Security, the annual total appears on Form SSA-1099, which the Social Security Administration mails each January. That’s your primary record.
If you pay Medicare directly through quarterly bills or bank withdrawals, keep the payment confirmations or bank statements. Medicare Advantage and Part D plans typically send an annual premium summary.
Self-employed filers should track premiums separately from other medical spending. The self-employed portion goes on Form 7206; only amounts above your earned-income cap belong on Schedule A. Mixing the two streams is the most common filing error here, and duplicate premium entries can trigger an IRS notice.