Short answer: if you own more than 2% of an S corporation in Louisiana, the company pays or reimburses your health insurance premiums and puts them in Box 1 of your W-2 as wages, but not in the Social Security and Medicare boxes. You then take them back off your income as the self-employed health insurance deduction, on Form 7206 and Schedule 1, line 17. Louisiana starts from adjusted gross income, so the deduction also lowers your Louisiana tax, at the flat 3% rate. (Reviewed November 2026 by Daniel Griffin, licensed independent advisor, NPN #22052447. Not tax advice; confirm with your tax preparer.)
- $9,293a year of the lowest-cost Silver plan for a 40-year-old in the typical Louisiana parish, 2027
- $1,422of Social Security and Medicare tax a Louisiana owner skips on it, against the same amount paid as salary under $192,300
- Box 1where those premiums land on your W-2; Boxes 3 and 5 stay clear of them
- 3%Louisiana’s flat rate from 2025; the deduction comes off it too
How the Money Moves in Louisiana
- Buy the planAny of the 6 insurers on the Louisiana marketplace, or a private plan, in your name or the company’s.
- The S corp pays$679 a month for a 40-year-old’s cheapest 2027 Silver plan in New Orleans, paid or reimbursed by the company.
- Payroll adds it$8,147 a year goes into W-2 Box 1 wages, not Boxes 3 and 5.
- Form 7206The deduction is worked out there, capped at your Medicare wages.
- Schedule 1Line 17: the $8,147 comes back off your income.
A more-than-2% shareholder is treated like a partner for fringe benefits, so the premiums cannot be a tax-free benefit the way they are for staff. IRS Notice 2008-1 is the route around that: wages for income tax, left out of Social Security and Medicare wages, then deducted under section 162(l).
Paying the premiums from your personal account and never running them through the company. The IRS’s own example in Notice 2008-1 is a shareholder who pays for a policy in their own name with no reimbursement: no plan established by the S corporation, no deduction.
In New Orleans that mistake costs the whole $8,147 and roughly $1,955 of federal income tax at 24%. The fix has a deadline: the company pays or reimburses the premiums by December 31 and adds them to your W-2. The year-end checklist has every date in order.
Work out your deduction
Form 7206-style worksheet. An estimate, not a tax return.Presets: the typical lowest-cost Louisiana Silver plan for 2027. Line 10: Social Security tax to the $192,300 wage base, Medicare 2.9%, plus 0.9% over $200,000. Nothing you type leaves this page until you send it.
The Cap Most Owners Miss
The deduction cannot be more than your earned income from the S corporation, which for a more-than-2% shareholder means wages as defined for Social Security and Medicare tax (section 162(l)(5)), Box 5 of the W-2. The premiums are in Box 1 but not Box 5, so they never raise the cap, and an owner who takes no salary gets no deduction at all. For the New Orleans plan above, a salary of $8,147 or more keeps every dollar deductible.
Three More Rules
- The spouse ruleNo deduction for any month you could join a subsidized employer plan, yours or your spouse’s, even if you did not enroll.
- Family countsYour spouse, dependents and any child under 27 at year end are covered; a Louisiana family of four’s typical lowest-cost Silver plan is $2,476 a month, $29,711 a year to deduct. A spouse, child, grandchild or parent of the owner counts as a 2% shareholder too.
- Marketplace creditOnly the premium you pay after any premium tax credit is deductible. Above $63,840 of income for one person there is no 2027 credit, so the full premium counts.
What It Is Worth in Louisiana for 2027
| Household | Per month | Deductible per year | Federal tax saved at 22% | At 24% | Plus Louisiana tax at 3% |
|---|---|---|---|---|---|
| One adult, 40 | $774 | $9,293 | $2,044 | $2,230 | $279 |
| Two adults, 40, and two children | $2,476 | $29,711 | $6,536 | $7,131 | $891 |
Louisiana taxes individual income at a flat 3% from the 2025 tax year (Act 11 of 2024), and a resident’s tax table income starts from adjusted gross income (R.S. 47:293), so the deduction lowers your Louisiana tax too. The marketplace in Louisiana has 6 insurers for 2027, a median of 42 plan options per parish, and a PPO in every one of its 64 parishes. Above $63,840 of household income for one person ($132,000 for a family of four) there is no premium tax credit, so the deduction carries the full saving.
What It Saves Across Louisiana
| Where | Lowest Silver, per month | Deductible per year | Federal tax saved at 24% | Payroll tax not charged | Louisiana tax saved at 3% |
|---|---|---|---|---|---|
| New Orleans (Orleans Parish) | $679 | $8,147 | $1,955 | $1,247 | $244 |
| Baton Rouge (East Baton Rouge Parish) | $706 | $8,477 | $2,035 | $1,297 | $254 |
| Metairie (Jefferson Parish) | $679 | $8,147 | $1,955 | $1,247 | $244 |
| Shreveport (Caddo Parish) | $641 | $7,692 | $1,846 | $1,177 | $231 |
| Lafayette (Lafayette Parish) | $774 | $9,293 | $2,230 | $1,422 | $279 |
Want a PPO? In New Orleans the cheapest Silver PPO for a 40-year-old is $1,173 a month, against $679 for the cheapest Silver plan of any kind. The extra $5,934 a year is deductible too, which at 24% trims it to about $4,509.
Louisiana: Flat 3% From 2025
Louisiana’s graduated brackets ended with the 2024 reform: from the 2025 tax year every dollar of a resident’s taxable income is taxed at 3%, and tax table income starts from adjusted gross income, so the deduction carries straight through. Premiums the S corporation runs through payroll save 3 cents on the dollar in Louisiana on top of the federal saving.
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Sole proprietor, partner or C corporation owner instead? The rules differ: see the self-employed health insurance deduction in Louisiana and how each kind of business handles owner health insurance. With staff in Louisiana, see S corp owners in Louisiana and ICHRA for small businesses.
Before the year closes: the year-end checklist, every date in order. Tax professionals with Louisiana clients: a printable one-page Louisiana handout.
Common Questions
Can an S corp owner deduct health insurance in Louisiana?
Yes, if you own more than 2% and the S corporation pays or reimburses the premiums and reports them in Box 1 of your W-2. You deduct them on Form 7206 and Schedule 1, line 17. Louisiana starts from adjusted gross income, so the deduction also lowers your Louisiana tax, at the flat 3% rate.
What if I paid the premiums from my personal account?
Have the S corporation reimburse you and add the amount to your W-2 before it is issued. A policy you pay yourself with no payment or reimbursement by the company gets no deduction; in New Orleans that is $8,147 a year on the cheapest Silver plan for a 40-year-old.
Does the S corp health insurance deduction lower Louisiana tax?
Yes. A Louisiana resident’s tax table income starts from adjusted gross income, which the deduction reduces, and the rate is a flat 3% from 2025.
Sources
- IRS, Instructions for Form 7206 (2025)
- IRS, Notice 2008-1 (2-percent S corporation shareholders)
- 26 U.S. Code section 162(l)
- IRS, Publication 974 (premium tax credit)
- Louisiana Department of Revenue, RIB 25-012 (Act 11: flat 3% from 2025)
- CMS, Plan Year 2027 Qualified Health Plan Landscape file
- HHS, 2026 poverty guidelines (2027 coverage)
- Social Security Administration, 2027 fact sheet (wage base)
- Louisiana R.S. 47:293(9) (tax table income for residents starts from adjusted gross income)