Can businesses deduct insurance premiums on taxes?

Deducting Business Insurance Premiums on Taxes in Vermont

In Vermont, businesses can generally deduct insurance premiums as a business expense when filing federal and state taxes. This deduction helps reduce taxable income, improving cash flow and operational budgeting.

Types of Insurance Premiums That Are Deductible

• General liability insurance premiums
• Property insurance related to business assets
• Workers' compensation insurance premiums
• Professional liability insurance (errors and omissions insurance)
• Business interruption insurance
• Health insurance premiums for employees (subject to IRS rules)

Operational Considerations for Vermont Businesses

• Recordkeeping: Maintain detailed records of all insurance premium payments to support deductions during tax reporting.
• Employee Classification: Correctly classify employees and independent contractors, as insurance obligations and deductible premiums may differ.
• Payroll Integration: For health and workers' compensation insurance, coordinate with payroll systems to accurately track premiums and related tax credits.
• Compliance: Ensure insurance policies meet Vermont state requirements, especially for workers' compensation and unemployment insurance.
• Consult with Tax Professionals: As tax rules can change, verify deductions with accountants familiar with Vermont and federal tax codes.

As of 2026, businesses should continue to monitor IRS guidelines and Vermont Department of Taxes updates to confirm eligibility and proper reporting of insurance premium deductions.