Common Therapist Tax Deductions to Shrink Your Tax Bill

Whether you're a psychologist, counselor, or social worker, seeing clients can take an emotional toll. But tax time doesn't have to drain your bank account. As a self-employed therapist, you can claim tax deductions to reduce your taxable income and keep more money in your pocket. 

Many therapists leave money on the table each tax season because they don't know what they can deduct. This guide will help you navigate the tax landscape, helping you keep more of your hard-earned money.

Top 12 Tax Deductions for Therapists 

1. Office and Workspace Expenses

Your office is more than just a workspace; it's the foundation of your practice—a sanctuary for healing and growth for your clients. Whether you rent an office or work from home, your workspace expenses are typically your largest deductible category. Office rent, utilities, furniture, and basic supplies all likely qualify as necessary business expenses.

For traditional office spaces:

If you rent a physical office space exclusively for your practice, the deduction is pretty straightforward. You can typically deduct the costs of rent and utilities, such as electricity, gas, water, trash pickup, and internet services. 

For home offices:

Instead of traditional office space, many therapists opt for a home office. To qualify for a home office deduction, the space must be your primary place of business and used exclusively for professional purposes. This means the area shouldn't double as a personal space, like a family den. 

Don't overlook the smaller purchases either. Those tissue boxes you buy in bulk at Costco? Water bottles to stock your minifridge for clients? All these could add up to hundreds of dollars in legitimate deductions throughout the year.

Find out what’s eligible to deduct and step-by-step instructions on how to calculate your deduction. Learn everything about the home office deduction →

2. Licensing and Professional Services

Your credentials open doors—literally. They're what allow you to practice, making licensing fees essential business expenses that pack more of a punch than you might realize.

State licensing renewals and professional association memberships like APA or state counseling boards all likely qualify for deductions, and those costs can quickly add up. 

What typically counts as deductible professional services:

• State licensing fees and renewals

• Professional association dues (APA, state counseling boards)

• Legal consultations for scope of practice questions

• Accounting services for your business

• Professional liability insurance premiums

These professional services protect and support your practice's operations, making them legitimate business investments that reduce your taxable income. Keep detailed records of all professional fees, as they demonstrate the ongoing costs of maintaining your professional standing.

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3. Professional Development and Education

Your commitment to growing as a therapist pays off for your clients and your tax bill. The IRS recognizes that staying current in mental health requires ongoing education, making many of your professional development costs fully deductible business expenses.

The mental health field is constantly evolving, making continuing education both a licensing requirement and a legitimate business expense. CEU courses, professional conferences, specialized training certifications (EMDR, DBT, CBT), books, and educational materials are all typically deductible

The IRS won't let you deduct education that meets the minimum requirements for your profession. Your master's degree in counseling? Not deductible, since that's the baseline requirement for practicing therapy. But that advanced trauma certification you earned last year? That's likely a legitimate business expense.

Professional development comes in many forms, and it doesn’t have to be in-person to qualify as a business expense. Virtual workshops, online certifications, webinars, and digital courses can all potentially qualify as deductible education expenses, providing flexibility while reducing your tax burden.

4. Technology and Software Expenses

The pandemic transformed how therapists deliver care, with many practitioners moving online for the first time in 2020. What started as an emergency response has become a permanent part of modern therapy practice, and it comes with costs:

• HIPAA-compliant platforms: Video conferencing software designed specifically for healthcare practitioners, secure messaging systems, and encrypted communication tools

• Digital practice management: Electronic consent forms and online scheduling systems

• Technology upgrades: Upgraded internet service, quality webcams, and noise-canceling headphones

• Security and compliance: Data encryption software, secure file storage systems, and HIPAA compliance training for telehealth

Whether you see clients in person or online, your practice requires technology. Practice management software, electronic health records systems, client portal platforms, appointment reminder services, and billing software all qualify as deductible business expenses. Even your computer, tablet, printer, and office phone system could potentially be written off as necessary tools for running your therapy practice.

5. Insurance Premiums

Insurance is a vital component of a well-managed therapy practice. The good news is that you can generally deduct premiums paid for various insurance policies. 

Types of deductible insurance include:

• Professional liability insurance: Also known as malpractice insurance, this is crucial for any therapist. It protects you from claims alleging negligence or harm in your professional services.

• General business insurance: This includes coverage for your office space and equipment. Whether it's protection against theft, fire, or other damages, these insurance costs are likely deductible.

Health insurance: You can generally deduct self-employed health insurance premiums for you, your spouse, and your dependents. But if you're eligible to participate in a plan through your spouse's employment, this deduction doesn’t apply.

Need coverage guidance? Find out which insurance types are essential and get step-by-step guidance on choosing coverage for your business.* Learn everything about business insurance →

6. Transportation and Vehicle Expenses

You can’t deduct daily commutes to your primary workplace from your taxes. But you can potentially deduct travel to locations other than your regular office, like visiting a client at a different site or driving to speak on a panel.

You have two options for calculating your deductible car expenses:

• Standard mileage rate. This method involves multiplying the total miles driven for business by the IRS's standard mileage rate for the tax year. For example, in 2025, the rate was $0.70 per mile for self-employed business owners.

• Actual expenses. This method requires calculating the full operational cost of your vehicle, including expenses like fuel, maintenance, insurance and loan or lease payments. Then, you determine the percentage of vehicle use for business and apply this percentage to the total cost of operating your vehicle.

Regardless of the method you choose, maintain detailed logs of your business miles, recording the date, purpose, and distance of each trip. Keep receipts for all vehicle-related expenses if you're using the actual expenses method.

Did you know? If you’re using Found, you can choose a deduction method and keep a log of the business miles you drive for easy tracking—for free. No more toggling between costly apps.

7. Therapeutic Aids and Client Tools

If you use specific types of aids during your therapy sessions, these are also likely deductible. This can range from workbooks, diaries, and therapeutic games to specialized equipment, such as sand trays, fidget spinners, or weighted blankets. 

Psychological testing instruments, assessment batteries (MMPI, Beck inventories), scoring software, and standardized protocols are specialized tools of your trade. Digital testing platforms and clinical assessment subscriptions also qualify as professional equipment expenses.

These items are integral to providing effective therapy and are deductible. Keep receipts for proof of purchase in case of an audit.

8. Marketing and Business Development

Building your practice requires getting your services in front of potential clients. Connecting with prospective clients comes with a cost, and fortunately, those expenses are typically deductible. Here are a few marketing expenses you may be able to deduct:

• Website development and maintenance

• Social media and SEO tools

• Online advertising via social media or practice directories such as Psychology Today

• Business cards

• Brochures or proactive flyers

• Branding and design, such as logo design or professional photography

• Workshop presentations or professional networking events

Money spent growing your practice and client base could become tomorrow’s tax savings. 

9. Business Travel and Conference Expenses

Advancing your skills often means traveling beyond your local area. When you attend professional conferences, training workshops, or continuing education events away from home, these travel expenses become valuable tax deductions, including:

• Transportation: Airfare, train tickets, or mileage for driving to professional events

• Lodging: Hotel costs for overnight stays during conferences or multi-day training programs

• Meals: 50% of meal costs while traveling for business 

• Conference fees: Registration costs for professional development events

• Ground transportation: Taxi, public transit, or rental car expenses at your destination

The key requirement is that the travel must be primarily for business purposes. You can't plan a trip to Hawaii to "recover" from a difficult client and call it a business expense. That weekend conference in paradise? The IRS wants to see legitimate professional development, not a cleverly disguised vacation with a two-hour workshop thrown in.

10. Contract Labor and Professional Services

Running a successful therapy practice often means building a support team. That CPA you call during tax season? Likely a deductible expense. The associate therapist you hire to expand your client capacity? Probably deductible. Your virtual assistant handling intake calls, the billing specialist navigating insurance claims, the attorney reviewing your practice contracts, and the web developer updating your telehealth portal—all legitimate business expenses that reduce your tax liability while improving your practice operations.

Did you know? Managing 1099s and contractor payments is even easier with Found's contractor management tools. There are no per-contractor fees, which means it's not even a business expense to deduct. Learn how to onboard, pay, and manage your 1099 contractors. →

11. Qualified Business Income (QBI) Deduction

This tax benefit lets eligible therapists deduct up to 20% of their qualified business income, potentially saving thousands in taxes. If your therapy business nets $50,000 after expenses, you could deduct an additional $10,000 from your taxable income.

Most therapists structured as sole proprietorships, partnerships, S Corps, or LLCs qualify for this deduction, though income limitations and complex rules apply. It's worth speaking with a tax professional to make sure you qualify and maximize this benefit.

12. Startup and Business Formation Costs

New to private practice? You can typically deduct up to $5,000 in startup costs during your first year. Initial equipment purchases, business registration fees, first website design, initial marketing costs, and professional consultations for practice launch all qualify.

Note that startup costs exceeding $5,000 may need to be amortized over several years rather than deducted immediately.

6 Steps to Maximizing Your Therapy Practice Tax Deductions

Running a successful therapy practice means understanding that every professional development course, office supply purchase, and telehealth platform subscription becomes more valuable when you know it's reducing your tax burden.

• Keep a separate business bank account for all therapy-related expenses and income

• Store digital receipts organized by deduction category

• Conduct monthly expense reviews to identify any overlooked deductions

• Log business travel and client visit mileage consistently

• Keep a running list of equipment and technology purchases

• Document the business purpose for expenses that are used for professional and personal purposes, such as your phone service or home office space

Taking Control of Your Business Finances with Found

There’s a lot that goes into tracking tax deductions for your therapy practice. If you want to take the easy way out, let Found do it for you. Found combines business banking, tax planning, and expense tracking in one platform built specifically for small business owners like therapists. 

With features like automatic expense categorization, receipt capture, and invoicing, Found helps you maintain organized financial records effortlessly. It even estimates your tax liability throughout the year, so you can focus more on your practice and less on manual financial tracking. Found helps you stay organized year-round so you can focus on what you do best: providing healing and support to your clients.

Banking built for therapists

Found automatically tracks your business expenses so you can focus on healing instead of bookkeeping.

Get started

Frequently asked questions about therapist tax deductions

Can you write off a therapy dog as a tax deduction for a therapist? 

Some expenses related to a therapy dog may be deductible for a therapist, such as costs for transportation, training, adoption fees, and supplies used at work locations, including beds and bowls. However, regular costs such as vet bills, food, and grooming are likely not deductible since they overlap with personal pet care expenses. If you’re considering bringing a therapy dog into your practice, it’s best to consult an accountant to determine which therapy dog expenses can be deducted based on your situation. 

Are telehealth platform fees tax-deductible for therapists?

Yes, HIPAA-compliant telehealth platforms, video conferencing software, secure messaging systems, and technology upgrades specifically for online therapy are all deductible business expenses. This includes backup internet connections and professional equipment for virtual sessions.

Can therapists write off their phone bill? 

Therapists can deduct the business portion of their phone bill if they use their phone for client calls, appointment scheduling, or other practice-related activities. You'll need to calculate the percentage used for business versus personal use.

Do therapists pay self-employment tax? 

Yes, therapists in private practice typically pay self-employment tax (15.3%) on their net earnings, covering Social Security and Medicare taxes. However, half of this self-employment tax is deductible on your tax return.

Can a therapist write off personal therapy on their taxes? 

It depends. If seeing your own therapist is necessary for your professional development, it could be argued that it’s a business expense. However, this is a more nuanced area and might require speaking with a CPA first. Some argue that if you’re using therapy to help balance the mental and emotional toll your work takes on you as a therapist, it could be okay. Others argue that it’s usually more of a personal medical expense. 

The information on this website is not intended to provide, and should not be relied on, for tax advice. 

*Found partners with various providers to enable you to compare offers from participating institutions, such as lending, filing services, and insurance providers. Found is not a lender, a filing service, nor an insurance provider.