Short answer: if you own more than 2% of an S corporation in West Virginia, 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. West Virginia starts from federal adjusted gross income, so the deduction also lowers your state tax: 4.58% of it above $60,000 of taxable income for 2026. (Reviewed November 2026 by Daniel Griffin, licensed independent advisor, NPN #22052447. Not tax advice; confirm with your tax preparer.)
- $14,121a year of the lowest-cost Silver plan for a 40-year-old in the typical West Virginia county, 2027
- $2,161of Social Security and Medicare tax a West Virginia 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
- 4.58%West Virginia’s top rate for 2026, above $60,000, after the 5% cut in SB 392
How the Money Moves in West Virginia
- Buy the planAny of the 2 insurers on the West Virginia marketplace, or a private plan, in your name or the company’s.
- The S corp pays$1,177 a month for a 40-year-old’s cheapest 2027 Silver plan in Charleston, paid or reimbursed by the company.
- Payroll adds it$14,121 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 $14,121 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 Charleston that mistake costs the whole $14,121 and roughly $3,389 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 West Virginia 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 Charleston plan above, a salary of $14,121 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 West Virginia family of four’s typical lowest-cost Silver plan is $3,762 a month, $45,148 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 West Virginia for 2027
| Household | Per month | Deductible per year | Federal tax saved at 22% | At 24% | Plus West Virginia tax at 4.58% |
|---|---|---|---|---|---|
| One adult, 40 | $1,177 | $14,121 | $3,107 | $3,389 | $647 |
| Two adults, 40, and two children | $3,762 | $45,148 | $9,933 | $10,835 | $2,068 |
West Virginia starts from federal adjusted gross income (W. Va. Code § 11-21-12) and, after the cut signed March 31, 2026, taxes it at 2.11% to 4.58%, the top rate above $60,000 of taxable income, so the deduction lowers your West Virginia tax too. The marketplace in West Virginia has 2 insurers for 2027, a median of 20 plan options per county, and a PPO in every one of its 55 counties. 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 West Virginia
| Where | Lowest Silver, per month | Deductible per year | Federal tax saved at 24% | Payroll tax not charged | West Virginia tax saved at 4.58% |
|---|---|---|---|---|---|
| Charleston (Kanawha County) | $1,177 | $14,121 | $3,389 | $2,161 | $647 |
| Huntington (Cabell County) | $1,264 | $15,172 | $3,641 | $2,321 | $695 |
| Morgantown (Monongalia County) | $1,154 | $13,847 | $3,323 | $2,119 | $634 |
| Martinsburg (Berkeley County) | $1,016 | $12,194 | $2,926 | $1,866 | $558 |
| Parkersburg (Wood County) | $1,259 | $15,106 | $3,625 | $2,311 | $692 |
Want a PPO? In Charleston the cheapest Silver PPO for a 40-year-old is $1,197 a month, against $1,177 for the cheapest Silver plan of any kind. The extra $240 a year is deductible too, which at 24% trims it to about $182.
West Virginia: The 2026 Cut and Your Premiums
West Virginia begins with federal adjusted gross income, so the deduction carries straight through. SB 392, signed March 31, 2026 and retroactive to January 1, cut every bracket by about 5%: 2.11% on the first $10,000 of taxable income, 2.81% to $25,000, 3.16% to $40,000, 4.22% to $60,000 and 4.58% above that. Premiums the company runs through payroll come off income in the 4.22% or 4.58% band for most owners.
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Sole proprietor, partner or C corporation owner instead? The rules differ: see the self-employed health insurance deduction in West Virginia and how each kind of business handles owner health insurance. With staff in West Virginia, see S corp owners in West Virginia and ICHRA for small businesses.
Before the year closes: the year-end checklist, every date in order. Tax professionals with West Virginia clients: a printable one-page West Virginia handout.
Common Questions
Can an S corp owner deduct health insurance in West Virginia?
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. West Virginia starts from federal adjusted gross income, so the deduction also lowers your state tax: 4.58% of it above $60,000 of taxable income for 2026.
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 Charleston that is $14,121 a year on the cheapest Silver plan for a 40-year-old.
Does the S corp health insurance deduction lower West Virginia tax?
Yes. West Virginia adjusted gross income starts from federal adjusted gross income, which the deduction reduces, and the 2026 top rate is 4.58% above $60,000 of taxable income.
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)
- West Virginia Tax Division, 2026 Income Tax Rate Cut (SB 392)
- CMS, Plan Year 2027 Qualified Health Plan Landscape file
- HHS, 2026 poverty guidelines (2027 coverage)
- Social Security Administration, 2027 fact sheet (wage base)
- West Virginia Code § 11-21-12 (West Virginia adjusted gross income starts from federal adjusted gross income)