Can businesses deduct insurance premiums on taxes?

Deducting Business Insurance Premiums on Taxes in Maryland

In Maryland, businesses can generally deduct insurance premiums as a business expense when filing taxes. This deduction helps reduce taxable income, improving overall financial management.

Types of Deductible Insurance Premiums

• General Liability Insurance: Premiums paid to protect against third-party claims are deductible.
• Property Insurance: Costs for insuring business property and equipment can be deducted.
• Workers’ Compensation Insurance: Premiums required by Maryland law for employee injury coverage are deductible.
• Professional Liability Insurance: Also known as errors and omissions insurance, premiums are deductible.
• Business Interruption Insurance: Premiums paid to cover income loss during disruptions can be deducted.

Operational Considerations

• Recordkeeping: Maintain clear records of all insurance premium payments to support deductions during tax reporting.
• Payroll Impact: For insurance related to employee benefits, such as health insurance, coordinate with payroll processing for accurate tax treatment.
• Compliance: Ensure insurance policies meet Maryland state requirements, especially workers’ compensation and unemployment insurance.
• Tax Reporting: Work with your accountant or tax professional to properly classify and report insurance expenses on federal and Maryland state tax returns.

As of 2026, deducting insurance premiums remains a practical strategy to manage business expenses and optimize tax liabilities in Maryland.