Tax Write-Offs for New Home Health agencies: The Complete List

Starting a home health agency comes with significant upfront costs, but the IRS allows you to deduct many of them. This guide covers the complete list of tax write-offs for new home health agencies, so you can reduce your taxable income and keep more of your hard-earned money. We’ll walk through each deduction, explain what qualifies, and give you practical steps to claim them correctly.

1. Startup Costs

The IRS lets you deduct up to $5,000 in startup costs in your first year, with the rest amortized over 180 months. Startup costs include market research, advertising before opening, training staff, and legal fees for forming your business. To qualify, your agency must be actively in business by the end of the year. Keep receipts for everything, and if your startup costs exceed $50,000, the $5,000 deduction is reduced dollar-for-dollar.

2. Vehicle Expenses

If you use your car for business, you can deduct vehicle expenses. You have two options: the standard mileage rate (67 cents per mile in 2026) or actual expenses (gas, oil, repairs, insurance, depreciation). For home health agencies, travel to patients’ homes is a core business expense. Keep a mileage log with dates, destinations, and purposes. If you use the actual expense method, track all vehicle-related receipts. Choose the method that gives you the larger deduction, but you must stick with it for the life of the vehicle.

3. Home Office Deduction

If you have a dedicated space in your home used exclusively for business, you can claim the home office deduction. This applies to administrative tasks like scheduling, billing, and phone calls. Use the simplified method ($5 per square foot, up to 300 square feet) or the regular method (percentage of home expenses like mortgage interest, utilities, and insurance). The space must be your principal place of business. Measure the square footage and calculate the percentage of your home used for business.

4. Employee Wages and Benefits

Salaries, wages, and bonuses for your staff are fully deductible. This includes nurses, aides, administrative staff, and yourself if you’re an S-corp owner. Also deductible: payroll taxes (Social Security, Medicare, unemployment), workers’ compensation insurance, and health insurance premiums you pay for employees. For yourself, if you’re self-employed, you can deduct health insurance premiums for you and your family, but not if you’re eligible for an employer-sponsored plan.

5. Professional Services

Fees for lawyers, accountants, and consultants are deductible. This includes setting up your LLC or corporation, tax preparation, and business advice. Also deductible: fees for credentialing with Medicare or Medicaid, and fees for accreditation bodies like The Joint Commission. Keep invoices and contracts to substantiate these expenses.

6. Insurance Premiums

Business insurance premiums are deductible. This includes general liability, professional liability (malpractice), property insurance, and business interruption insurance. For home health agencies, you may also need cyber liability insurance to protect patient data. Premiums are typically paid monthly or annually; deduct them in the year paid.

7. Office Supplies and Equipment

Office supplies like paper, pens, and printer ink are deductible. Equipment like computers, phones, and office furniture can be deducted under Section 179, which allows you to expense the full cost in the year of purchase, up to a limit ($1,050,000 in 2026). This is a huge benefit for new agencies buying laptops, tablets, and software. Alternatively, you can depreciate equipment over its useful life (5 years for computers).

8. Software and Subscriptions

Software for electronic health records (EHR), billing, scheduling, and accounting is deductible. This includes monthly subscription fees for cloud-based tools. If you purchase software outright, you can deduct it under Section 179. Also deductible: professional association memberships, industry publications, and continuing education courses for yourself and staff.

9. Marketing and Advertising

Costs to promote your agency are deductible. This includes website design and hosting, online ads (Google, Facebook), print materials, and promotional items. Also deductible: meals and entertainment for client meetings (50% of the cost), and community event sponsorships. Keep receipts and note the business purpose of each expense.

10. Travel and Meals

Business travel is deductible, including airfare, hotels, and rental cars for conferences or training. Meals during business travel are 50% deductible. For local travel, use the mileage rate or actual expenses. If you take clients or referral sources to lunch, that’s 50% deductible. Document the business purpose and who you met with.

11. Continuing Education and Training

Tuition, registration fees, and course materials for yourself and employees are deductible. This includes certifications like CPR, first aid, or specialized nursing training. Also deductible: travel to and from training (mileage or actual expenses). These expenses must be related to your business and maintain or improve skills.

12. Utilities and Rent

If you lease office space, rent is deductible. Utilities like electricity, water, and internet are also deductible. If you work from home, you can deduct a portion of these under the home office deduction. For leased space, keep lease agreements and utility bills.

13. Interest and Bank Fees

Interest on business loans, credit cards, and lines of credit is deductible. This includes interest on equipment loans or a business mortgage. Bank fees for business accounts, merchant processing fees, and wire transfer fees are also deductible. Keep statements to track these costs.

14. Taxes and Licenses

State and local business taxes, franchise taxes, and property taxes on business property are deductible. Also deductible: business licenses, permits, and regulatory fees. For home health agencies, this includes state licensing fees and Medicare certification costs. These are often overlooked but can add up.

FAQ

Can I deduct the cost of my vehicle if I use it for both personal and business use?

Yes, but only the business portion. Track your mileage and business use percentage. For example, if you drive 10,000 miles total and 7,000 are for business, you can deduct 70% of vehicle expenses.

What if I don’t have a dedicated home office?

You can still deduct a home office if you have a space used regularly and exclusively for business. If you don’t, you cannot claim the deduction. Consider setting up a corner of a room with a desk and filing cabinet, and use it only for business.

Are health insurance premiums for my employees deductible?

Yes, health insurance premiums you pay for employees are deductible as a business expense. If you’re self-employed, you can deduct your own premiums on your personal return, subject to limits.

How long should I keep receipts for tax deductions?

Keep receipts for at least 3 years from the date you file your return, but for assets like equipment, keep records for the life of the asset plus 3 years. Use a digital system like QuickBooks or a receipt scanner to stay organized.

Related guides

• 7 Mistakes New Home Health Agencys Make in Their First Year
• S-Corp vs LLC for New Home Health Agencys: Which Saves More on Taxes?

The bottom line

Tax write-offs can significantly reduce your taxable income, but only if you claim them correctly. Start by tracking every business expense from day one, using separate accounts and credit cards. Consult with a CPA who specializes in healthcare businesses to ensure you’re maximizing deductions and staying compliant. With the right approach, you can save thousands of dollars in your first year of operation.