Yes, premiums for most business insurance are deductible. IRS Publication 334 (2025) lists fire, theft and flood cover, liability, malpractice, workers' compensation, business interruption, and vehicle insurance for business use. Premiums for a policy that pays for your own lost earnings due to sickness or disability are not deductible. ProfitDrawer's bookkeeping spreadsheets let you set your own expense categories, so insurance can have its own line.
Rules from IRS Publication 334 (2025), for 2025 returns:
- Vehicle insurance: if the vehicle is also used personally, deduct only the business part. If you use the standard mileage rate, you cannot deduct car insurance separately.
- Prepaid policies: deduct each year's share. A 3-year policy paid in 2025 gives a 2025 deduction only for the 2025 premium.
- Not deductible: amounts put in a self-insurance reserve, policies that pay for your own lost earnings, life insurance where you are directly or indirectly a beneficiary (contracts issued after June 8, 1997), and life insurance taken out to secure a business loan.
- Employees: group hospitalization and medical insurance for employees, including long-term care insurance, is deductible.
- Your own health insurance: if you are self-employed, do not put it on Schedule C. It may qualify for the self-employed health insurance deduction on Schedule 1 (Form 1040), which has its own rules.
Keep each policy and proof of payment with your records. General information, not tax advice.
Source: IRS Publication 334 (2025), Tax Guide for Small Business · Updated
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General information, not tax, legal or financial advice. Check the rules for your state and your situation.