Can businesses deduct insurance premiums on taxes?

Deducting Insurance Premiums on Business Taxes in North Dakota

In North Dakota, businesses can generally deduct insurance premiums as a business expense on their federal and state tax returns. This deduction helps reduce taxable income, improving cash flow for operations.

Types of Deductible Insurance Premiums

• General Liability Insurance: Premiums for protecting against third-party claims are deductible.
• Property Insurance: Coverage for business property and equipment premiums are deductible.
• Workers' Compensation Insurance: Mandatory in North Dakota for most employers, premiums are deductible as a business expense.
• Health Insurance for Employees: Premiums paid by the business for employee health plans are typically deductible.
• Professional Liability Insurance: Premiums for errors and omissions coverage can be deducted.

Operational Considerations

• Recordkeeping: Maintain detailed records of all insurance premium payments to support deductions during tax filing and potential audits.
• Payroll Integration: For employee-related insurance, coordinate with payroll systems to accurately track employer contributions.
• Compliance: Ensure insurance coverage meets North Dakota state requirements, such as workers' compensation mandates, to avoid penalties.
• Bookkeeping Automation: Use accounting software to categorize insurance expenses correctly, streamlining tax preparation.

As of 2026, businesses should consult with a tax professional to confirm specific deductibility rules and any updates to federal or North Dakota tax codes that may affect insurance premium deductions.