Self-employed health insurance

Self-employed health insurance

Host : Are there any other goodies for small business people in the new law?

David : Yes, there's improvement in the ability to deduct your health insurance if you're self-employed. Previous changes in 1996 allowed self-employed folks to gradually deduct more and more of their health insurance, but it maxed out at 80 percent in 2006.

The new law basically keeps this gradual increase in the ability to deduct your health insurance, but you now can deduct 100 percent of your health insurance beginning in 2007. So this eventually grants a benefit to self-employed people that larger corporations have enjoyed for decades.

And there's another item that helps self-employed folks and others who might have to make estimated tax payments. Under the new law, you won't face a penalty if your net tax liability at the end of the year is less than $1,000. This is up from $500.