The Small Business Jobs and Credit Act, which passed the House Thursday, includes a new tax break for self-employed people who pay their own health insurance premiums.
Under current law, the self-employed can deduct premiums they pay for themselves and their immediate families from their income before computing income tax, but not before they compute their Social Security and Medicare tax (also known as self-employment tax.)
Under the small business act, which President Obama is expected to sign Monday, the self-employed can also deduct premiums from their income before calculating self-employment tax, but only for 2010. The bill will give the self-employed the same tax break that employers get on health insurance premiums they pay for their employees.