Understanding tax deductions for therapists

“I read somewhere that 59% of taxpayers think federal taxes are too high^[1],” the therapist said, rummaging through a dusty bookshelf until she pulled out a box labeled “Deductions, maybe?”

The accountant glanced at it and smiled. “Do you think yours are too high? Or is it just that no one ever taught you how to lower them?”

She sighed. “I honestly don’t know. I’ve got receipts for everything—from therapy tools to Zoom upgrades—but no idea what I can actually write off.”

The accountant nodded. “You’re not the only one. Therapists leave a lot on the table without even realizing it.”

—

If you are a therapist in private practice, you have probably lived some version of this conversation. 

Every year, therapists second-guess which expenses they can actually write off. That shoebox full of receipts—books, CE credits, fidget tools, office supplies—might hold hundreds, even thousands of dollars in deductible expenses. But without clear guidance, those receipts just sit there, unused.

If you find yourself in the same situation, you are in the right place. This guide will walk you through the most common tax deductions available to therapists, which expenses you can confidently claim, and how to navigate the difference between personal and business expenses.

‍Understanding Schedule C and Schedule A—how business and personal deductions differ

There are two main types of deductions the IRS allows: personal deductions and business expense deductions. Both can help reduce your taxable income, but they’re reported in very different ways.

Schedule A: personal deductions

Schedule A is used for itemized personal deductions—things unrelated to running your practice, but still eligible to reduce your taxable income. These deductions include:

• Mortgage interest
• State and local income or property taxes (up to $10,000)
• Charitable contributions
• Medical and dental expenses (if they exceed 7.5% of your AGI)
• Certain miscellaneous deductions, like investment fees or unreimbursed employee expenses (though many of these were suspended under the Tax Cuts and Jobs Act)

When you file your taxes, you choose either the standard deduction or itemized deductions (via Schedule A)—whichever lowers your tax bill more. For 2024, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly. Most people opt for the standard deduction because it’s higher than what they’d qualify for itemizing.

But here’s where many therapists get confused:
They assume that if they take the standard deduction, they can’t also claim business expenses. That’s not the case.

Business deductions are entirely separate and reported on Schedule C—they don’t depend on whether you itemize personal deductions. So yes, you can take the standard deduction and still deduct eligible business expenses like office rent, software, CEUs, and more. One doesn’t cancel out the other.

Also read: Schedule A (Form 1040): A guide to the itemized deduction

Schedule C: business expenses

If you’re self-employed as a private practice therapist, you’ll report your business income and expenses on Schedule C (Profit or Loss from Business). This is where your tax-deductible business expenses go—expenses directly related to running your therapy practice.

Think of it this way: Schedule A covers personal deductions. Schedule C covers your business. Confusing the two—or claiming business expenses on the wrong form—can lead to missed write-offs or raise red flags with the IRS.

Here’s what you can claim on Schedule C. 

Therapy as a business—expenses you can write off

1. Licensing and renewals

Every year, thousands of therapists across the country pay hundreds—or even thousands—of dollars in licensing and renewal fees to stay compliant. 

Whether you’re licensed as a Licensed Professional Counselor (LPC), Licensed Marriage and Family Therapist (LMFT), or any other state-specific credential, the fees associated with maintaining and renewing your license are considered ordinary and necessary business expenses by the IRS. This means all those licnesing and renewal fees are fully deductible. 

Here’s what qualifies as deductible when it comes to licensing:

• Initial licensing fees: If you paid for your initial licensure exam and application fees, these expenses can be deducted as part of your business startup costs.

• License renewal fees: These are annual or biennial fees you pay to keep your license active. Whether you’re paying for your state licensure or a national certification, you can deduct the full amount.

2. Qualified business income deduction

The Qualified Business Income Deduction (QBID)^[3]—sometimes called the QBI deduction or Section 199A deduction allows eligible business owners to deduct up to 20% of their qualified business income (QBI) from their taxable income. 

But are therapists eligible?

The IRS classifies therapy practices as part of a Specified Service Trade or Business (SSTB). This category includes professions where the principal asset is the reputation or skill of one or more of its owners—like doctors, lawyers, consultants, and yes, therapists.

Generally, SSTBs face limitations or exclusions when it comes to claiming the QBID, especially if their income exceeds certain thresholds. That’s because the IRS wants to restrict this deduction from being used by high-income professionals in service-based businesses.

While it sounds like therapists are automatically excluded from the QBI deduction, there’s a major exception based on income. If your taxable income before the QBID is below the IRS thresholds, your therapy practice can still qualify—even though it’s an SSTB.

Here are the thresholds for 2024:

• Single filers: Full deduction if your taxable income is $191,950 or less
• Married filing jointly: Full deduction if your taxable income is $383,900 or less

If you fall between the phase-out range:

• Single filers: Between $191,950 and $241,950
• Married filing jointly: Between $383,900 and $483,900

Then you may still qualify for a partial deduction, but it’s subject to a more complex calculation involving your total wages and the amount of qualified business property you own.

If your taxable income is above the upper limit of the phase-out range, the QBI deduction is completely phased out for SSTBs like therapy practices.

3. Therapeutic materials and aids

From sand trays and sensory toys to EMDR light bars and therapy cards, therapeutic tools essential to your practice, and thankfully, they’re also deductible business expenses.

Any material or aid you purchase specifically to support the therapeutic process can typically be written off on your taxes. That includes:

• Art supplies for expressive therapies
• Worksheets, games, and visuals for child and adolescent work
• Mindfulness bells or meditation cushions
• Therapy-specific books or psychoeducational resources used in sessions

Just make sure the purchase serves a clear professional purpose.

4. Books and reference guides

Whether it’s a clinical manual, a new release on trauma therapy, or a subscription to a professional journal—if it supports your work, it could be deductible.

If a book, guide, or subscription directly relates to your therapy practice—whether it helps you understand a treatment modality, refine your clinical skills, or stay updated on mental health research—it typically qualifies as a deductible expense.

Examples of deductible materials include:

• Clinical books like The Body Keeps the Score, Trauma and Recovery, or Motivational Interviewing.
• Therapy workbooks and manuals used to guide sessions.
• Diagnostic references like the DSM-5-TR.
• Specialized books on modalities like EMDR, ACT, or play therapy.
• Professional journals such as Psychotherapy Networker, Journal of Counseling & Development, or Social Work Today.
• Subscriptions to research databases or psychology magazines that support your clinical work. 

What doesn’t count?

Books or materials purchased for personal interest or self-help generally don’t qualify—even if they are related to mental health topics. For example, a memoir about addiction recovery or a general wellness magazine isn’t deductible unless you’re using it specifically in your sessions or for case research.

5. Continuing education

Nearly 90% of therapists actively engage in continuing education ^[4] to stay up-to-date with the latest research, emerging therapeutic techniques, and best practices to provide the most effective care for their clients. 

Whether you’re fulfilling state licensure requirements or deepening your expertise in a specific modality, the costs of qualified CE can be written off as business expenses.

Here are examples of CE that typically count:

• State-approved CE courses required for license renewal (e.g., 36 CE hours every two years for LPCs in Texas)
• Training in evidence-based modalities (e.g., EMDR, DBT, CBT, ACT)
• Workshops or webinars on clinical skills, ethics, trauma-informed care, telehealth practices
• Supervised training hours for new specialties (e.g., becoming certified in play therapy)

6. Professional membership fees

If you’re a licensed therapist practicing in the U.S., you’re likely a member of one or more professional organizations. These memberships typically offer continuing education opportunities, access to clinical resources, and updates on licensing requirements, ethics, and industry trends.

What many therapists might not realize is that membership fees paid to professional organizations are fully deductible as business expenses.

This includes dues paid to:

• National associations like the American Counseling Association (ACA)^[5], National Association of Social Workers (NASW)^[6], or the American Association for Marriage and Family Therapy (AAMFT)^[7]
• State-level licensing boards or regional associations
• Specialty organizations such as the EMDR International Association (EMDRIA)^[8] or play therapy groups

7. Peer consultation and supervision

That’s because consultation is a key part of managing a private practice. Whether it’s for clinical insight, ethical decision-making, or navigating complex cases, it helps therapists stay informed, confident, and aligned with best practices.

The money you spend on these services can often be deducted as a business expense—as long as the consultation directly supports your current line of work.

That means if you’re paying for:

• Individual or group consultation to navigate clinical cases
• Monthly peer consultation groups focused on specific modalities
• Ethics-focused supervision to strengthen decision-making

Those costs likely qualify as ordinary and necessary expenses under IRS guidelines and can be included on your Schedule C.

Just keep in mind: If the supervision is meant to qualify you for a new profession (like switching from LCSW to psychologist), the expense becomes educational—not deductible as a business write-off.

8. Digital tools and software

Therapists rely on various tools and software to manage their practices more efficiently and provide quality care. In fact, around 80% of therapists use electronic health records (EHR) to securely store and track client information^[10], ensuring HIPAA compliance. 

Luckily for you, most of the charges for using these tools are deductible. 

Some examples include:

• SimplePractice^[11] and TheraNest^[12] (practice management and telehealth)
• Google Workspace^[13] and Dropbox (document storage and management)
• Doxy.me^[14] and VSee^[15] (telehealth platforms)
• QuickBooks^[16] and FreshBooks ^[17](accounting and billing)

Also read: 7 best accounting software in 2025 for self-employed individuals

9. Insurance premiums

Running a private practice comes with its share of risks—and that’s why insurance is non-negotiable. But here’s the upside: Most of the insurance premiums you pay to protect your business can also protect your wallet at tax time.

Here are the insurance premiums that are tax-deductible:

• Professional liability insurance: Also known as malpractice insurance, this is the one you must carry if you’re in private practice. It protects you in the event of a client complaint or legal claim related to your clinical work.

• General business liability insurance: This type of insurance protects you against non-clinical risks—like a client slipping and falling in your office or property damage. It’s often bundled with renter’s insurance for your workspace.

• Business owner’s policy (BOP): Many therapists carry a combined policy that includes both general liability and property coverage. If you’ve purchased a BOP, the entire premium is typically deductible as long as it is fully related to your business.

• Cyber liability insurance: With telehealth and digital records becoming the norm, more therapists are adding cyber insurance to protect client data and comply with HIPAA requirements. This covers you in case of data breaches or cyberattacks.

• Worker’s compensation insurance: If you have employees or interns on your payroll, you might be required by your state to carry worker’s comp. This protects them (and you) if they get injured on the job.

10. Personal therapy costs

That’s no surprise—supporting others starts with taking care of yourself. As a therapist, prioritizing your mental health is essential to providing ethical, effective care to your clients.

What many therapists don’t realize is that they can actually deduct the cost of their own therapy sessions if they are related to your business. For instance, if you seek therapy for issues that may impact your ability to provide effective care—such as burnout or secondary trauma—the cost of therapy may qualify as a deductible business expense.

11. General business expenses

Banking and financial fees

Your business’s banking fees—such as maintenance fees, overdraft charges, and account transaction fees—are deductible. These are considered regular business expenses since they’re tied directly to your practice’s financial operations. Similarly, payment processor fees for platforms like Square^[19] or PayPal ^[20]are deductible because they’re necessary for client payments.

Marketing and advertising

Whether you’re paying for a website, social media ads, business cards, or printed brochures, you can deduct the costs related to these activities. For example, if you use Facebook ads or a Google ad campaign to attract new clients, the amount spent is a deductible business expense. SEO services and professional photography for your website also qualify.

Office setups

From furniture to technology, setting up an office is necessary for providing therapy services. This includes desks, chairs, computers, and specialized equipment (like therapy aids). Other common deductible items include supplies like paper, pens, and any other office materials that are used in your daily practice.

Travel and meals for professional activities

Travel and meal expenses incurred while attending conferences, workshops, or meetings with clients are deductible, as long as they’re business-related. If you travel to a professional seminar or for peer consultation or supervision, the transportation (flights, mileage, etc.) and meals can be claimed.

Note that meals are generally only 50% deductible unless you meet specific criteria. 

Also read: How to deduct meals and entertainment in 2025

How to maximize your deductions—best practices and tips

To make the most of your tax deductions, staying organized and diligent throughout the year is key. Proper bookkeeping ensures you don’t miss any opportunities to reduce your taxable income and helps you maintain clear records when tax season rolls around.

Here are some tips to help you maximize your deductions and keep your finances in order.

1. Track expenses regularly

Tracking your expenses consistently throughout the year is essential. Whether you use a digital bookkeeping system or a physical journal, make it a habit to categorize your expenses as they occur. This way, when tax season arrives, you won’t have to spend hours scrambling to find receipts or remember which expenses were deductible.

Also read: The role of accurate bookkeeping in tax preparation and compliance

2. Track your mileage and travel expenses

If you travel for professional purposes, keeping track of mileage and travel expenses can lead to significant tax savings. Use mileage tracking apps to automatically log business miles. Additionally, remember to keep receipts for transportation, lodging, and meals when you attend conferences, workshops, or other professional events.

3. Simplify invoicing and payments

Payment processors like Square and PayPal not only make receiving payments easier—they also track fees and income automatically. Ensure you regularly download transaction reports from these platforms to keep your records up to date and make tax filing more efficient.

Keep thorough records for potential audits

The IRS requires detailed documentation of your business expenses. Maintain clear and organized records of all receipts, invoices, and any other proof of business-related purchases through accurate bookkeeping. This is crucial in the event of an audit and helps justify deductions, especially for gray-area expenses.

4. Consider professional assistance

While managing your finances yourself is possible, a bookkeeper who specializes in working with therapists can make the job much faster, efficient, and error-free. They’ll ensure you’re claiming all eligible deductions, especially those that are specific to your industry, and help you avoid costly mistakes.

The bottom line

Knowing what you can deduct is only half the battle. To actually save on taxes, you need to track, categorize, and manage those expenses consistently throughout the year, and that’s where professional bookkeeping makes all the difference.

At CoCountant, we specialize in helping therapists like you navigate the complexities of tax season. Our professional bookkeeping services are tailored to the unique needs of therapy practices, ensuring that every deductible expense—from licensing fees to continuing education and office supplies—is meticulously tracked and categorized. 

We handle everything from budgeting and invoicing to tax preparation and quarterly reports so you can focus on providing exceptional care to your clients.

FAQs

Can bookkeeping help me determine whether an expense is personal or business-related?

Yes! One of the most valuable roles that bookkeeping plays is classifying expenses correctly. With accurate bookkeeping, you can easily distinguish between personal and business expenses.

Are my home office expenses deductible if I primarily work from home?

Yes, if you have a dedicated space in your home used exclusively for your therapy practice, you may be able to deduct home office expenses. This includes a portion of your rent, utilities, internet, and insurance. To qualify for this deduction, your home office must be used regularly and exclusively for your business.

What’s the best way to handle receipts for tax deductions in my bookkeeping?

Digital tools like receipt scanning apps can capture and store receipts for easy reference, ensuring that you don’t lose track of your deductible expenses.