Tax Deductions for New Therapy Practices You Are Probably Missing

Starting a therapy practice comes with a steep learning curve, and taxes often fall to the bottom of the list. Yet missing deductions means paying more to the IRS than necessary. This guide covers the deductions new therapy practices commonly overlook, with realistic 2026 figures and steps you can take this week to reduce your tax bill.

Home Office Deduction: More Than a Desk

If you use a dedicated space in your home exclusively for business, you can deduct it. The IRS offers two methods:

• Simplified method: $5 per square foot, up to 300 square feet, max $1,500.
• Regular method: Actual expenses (mortgage interest, rent, utilities, insurance) multiplied by the percentage of your home used for business.

Many new therapists skip this because they worry about audits. But if you meet the exclusive use test, it’s legitimate. For example, a 150-square-foot office in a 1,500-square-foot home equals 10% of qualifying expenses. If your rent is $2,000/month, that’s $200/month, or $2,400/year.

Action this week: Measure your office space, calculate the percentage, and set up a spreadsheet to track home expenses.

Continuing Education and Licensing Fees

You must maintain your license and stay current with CEUs. These costs are deductible, but many therapists forget to track them.

• License renewal fees: $50 to $300 per year depending on state.
• CEU courses: $20 to $500 per course, often required every 1 to 3 years.
• Travel to conferences: Airfare, hotel, meals (50% deductible), and registration fees.

Keep receipts and a log of dates and purposes. If you take a course online, save the payment confirmation.

Action this week: Review your credit card statements for the last 12 months and list all CEU and licensing expenses.

Professional Liability Insurance and Other Insurance Premiums

Malpractice insurance is non-negotiable, and it’s fully deductible. Also deductible: business owner’s policy, cyber liability, and disability insurance if you pay premiums with after-tax dollars.

• Malpractice insurance: $500 to $2,500 per year for new therapists.
• Business owner’s policy: $300 to $800 per year.
• Cyber liability: $200 to $600 per year.

These premiums are ordinary and necessary business expenses. Deduct them on Schedule C.

Action this week: Locate your insurance invoices and add them to your tax folder.

Marketing and Website Costs

New practices often spend on marketing but forget to deduct every piece. Deductible items include:

• Website design and hosting: $500 to $2,000 for design, $10 to $50/month for hosting.
• Domain name: $10 to $20/year.
• Online advertising (Google, Facebook): $100 to $1,000/month.
• Business cards and brochures: $50 to $300.
• Professional headshots: $100 to $500.

Even if you use a free website builder, the domain and hosting are deductible. Track all marketing expenses, no matter how small.

Action this week: Open your bank and credit card statements, highlight every marketing-related charge, and compile them in a spreadsheet.

Office Supplies and Equipment

You need a computer, printer, paper, pens, and maybe a couch. These are deductible, but the rules differ:

• Supplies under $2,500 each: Deduct fully in the year of purchase (using de minimis safe harbor).
• Equipment over $2,500: Depreciate over time or use Section 179 to deduct the full cost in year one, up to certain limits.

For example, a new laptop at $1,200 is fully deductible. A $3,000 therapy couch can be deducted in full using Section 179, provided your business has a profit.

Action this week: List all equipment purchases from the last year, noting cost and date. Consult your tax pro about Section 179 eligibility.

Software Subscriptions and Digital Tools

You likely pay for practice management software, telehealth platforms, and scheduling tools. These are 100% deductible as business expenses.

• Practice management software: $50 to $200/month.
• Telehealth platform: $30 to $100/month.
• Scheduling and billing tools: $20 to $80/month.
• Email marketing software: $15 to $50/month.

Don’t forget the annual subscription for your EHR or the $10/month for a scheduling app. Every dollar counts.

Action this week: Review your bank statements for recurring software charges and list them with annual totals.

Professional Services and Bank Fees

You may hire an accountant, bookkeeper, or attorney. Those fees are deductible. Also deductible: bank fees, credit card processing fees, and merchant account fees.

• Accountant or tax preparer: $300 to $1,000/year.
• Bookkeeper: $100 to $300/month.
• Credit card processing fees: 2% to 4% of revenue.

These are often overlooked because they feel like overhead, but they are legitimate deductions.

Action this week: Gather invoices from your accountant, bookkeeper, and bank statements showing fees.

Vehicle and Travel Expenses

If you drive to see clients (e.g., home visits) or to buy supplies, you can deduct vehicle expenses. Two methods:

• Standard mileage rate (2026): $0.70 per mile (estimated, check IRS).
• Actual expenses: Gas, repairs, insurance, depreciation, multiplied by business use percentage.

Keep a mileage log with date, purpose, and miles. Also deductible: parking fees and tolls. Travel for conferences or training is separate and fully deductible (with 50% meals).

Action this week: Start a mileage log today. Note any trips you’ve already taken this year.

Retirement Contributions

As a self-employed therapist, you can deduct contributions to a SEP IRA or Solo 401(k). This reduces your taxable income and builds your retirement.

• SEP IRA: Up to 25% of net earnings, max $70,000 in 2026 (estimated).
• Solo 401(k): Employee contribution up to $23,500 plus employer share, total up to $70,000.

Even a small contribution, like $5,000, can save you $1,000+ in taxes.

Action this week: Open a SEP IRA or Solo 401(k) with a brokerage. You have until the tax filing deadline to contribute for the previous year.

Health Insurance Premiums

If you pay for your own health insurance, you can deduct premiums on your personal return (not Schedule C), reducing your adjusted gross income. This includes medical, dental, and long-term care insurance (within limits).

Action this week: Gather your 2026 premium statements and give them to your tax preparer.

FAQ

Can I deduct the cost of a home office if I also see clients there? Yes, as long as the space is used exclusively and regularly for business. If you also use it for personal purposes, you cannot deduct it.

What if I don’t have a profit yet? Can I still deduct expenses? Yes, you can deduct expenses up to the amount of your business income. If you have a loss, it may offset other income, but be aware of hobby loss rules. You need to show a profit in at least 3 of 5 years.

How long should I keep receipts? Keep receipts for at least 3 years from the date you file your return, but for assets like equipment, keep them until the depreciation period ends. Safer to keep for 6 years.

Should I hire a tax professional? If your practice is growing, a CPA who works with small businesses can save you more than their fee. Expect to pay $300 to $1,000 for tax preparation.

Related guides

• 7 Mistakes New Therapy Practices Make in Their First Year
• S-Corp vs LLC for New Therapy Practices: Which Saves More on Taxes?
• Tax Write-Offs for New Therapy Practices: The Complete List

The bottom line

New therapy practices leave thousands of dollars on the table by missing deductions. Start by tracking home office, CEU, insurance, marketing, software, and professional fees. Use the simplified home office method if you qualify. Keep a mileage log. Open a retirement account. And don’t forget health insurance premiums. Take one action this week: compile your expenses into a spreadsheet. That simple step will put you ahead of most new practice owners and reduce your tax bill when April comes.