Simplifying Taxes: Must-Know Tax Deductions for Therapists in 2025
Introduction: If you're a therapist running your own practice, knowing what you can deduct on your taxes can save you some money, as well as reduce the overwhelm of taxes in general. Tax stuff can be confusing, which is why we’ve put together this list of essential deductions. In this guide, I'll walk you through the most important tax deductions for therapists in 2025. Let’s make sure you keep more of your hard-earned money!
Standard vs. Itemized Deductions: When it comes to filing your personal taxes, you’ve got two choices: the standard deduction or itemized deductions. The standard deduction is a fixed amount you can subtract from your income. It’s simple and easy. On the other hand, itemized deductions let you list out specific expenses like mortgage interest or medical bills. These deductions are reported on Schedule A, Form 1040.
Generally, you'll choose the standard deduction if it’s higher than the total of your itemized expenses. But if your individual expenses add up to more than the standard deduction, itemizing can save you more money. For example, if the standard deduction is $12,950 but your itemized deductions, such as $8,000 in mortgage interest and $6,000 in medical expenses, total $14,000, it would be better to itemize.
Now, business expenses are a bit different. You can always deduct these whether you go with the standard deduction or itemize your personal expenses. You just report your business expenses separately on a different part of your tax form (Schedule C, Form 1040). It’s like getting the best of both worlds! Below you will find a list of the key business deductions you should ensure you’re taking in 2025.
For all QuickBooks Online users - check out this free chart of accounts for therapists to make sure you never miss another deduction. This spreadsheet is ready to be imported directly into QuickBooks so you can start recording your deductible expenses straight away. Video tutorial included :)
Key Tax Deductions for Therapists:
Advertising and Marketing:
Eligible expenses include online and print ads, website maintenance, professional headshots, logo design, SEO tools, business cards, brochures, sponsorships, promotional items, and directory listing fees.
Note: Temporary signs are deductible, but permanent signs must be depreciated.
Accounting and Bookkeeping:
Deduct costs for accountants, bookkeepers, tax advisors, and accounting software.
Business Meals:
50% deductible if purchased from a qualifying establishment and shared with a business associate. Keep detailed records of the cost, date, location, business purpose, and attendees.
Business Travel:
Deduct travel expenses for business trips, including transportation, lodging, baggage fees, rental cars, laundry, and 50% of meals.
Bank Fees:
Overdraft and maintenance fees are deductible.
Vehicle Use:
Deduct through mileage rate (70 cents per mile for 2025) or actual expenses, excluding regular commute. Detailed records are essential. For all the details visit: IRS 2025 mileage rates
Membership Fees:
Deduct fees for professional organizations and related public or civic organizations.
Continuing Education:
Deduct costs for courses, workshops, certification programs, supervision, and related materials if they improve or maintain professional skills.
Office Rent and Home Office:
Rent and utilities for an external office are fully deductible. For home offices, a portion of rent/mortgage and utilities is deductible if the space is used exclusively and regularly for business.
Office Supplies:
Deduct expenses for stationery, computers, printers, small furniture, and artwork.
Books and Therapeutic Aids:
Deduct therapeutic toys, art supplies, and professional books used in sessions.
Personal Therapy:
Potentially deductible, but consult a tax professional.
Payment Processor Fees:
Deduct fees from services like Square and Stripe.
Booking and Billing Software:
Deduct subscription costs for scheduling and invoicing software.
Professional and General Liability Insurance:
Deduct premiums for malpractice and general liability insurance.
Student Loan Interest:
Deduct interest paid if over $600 during the year.
Qualified Business Income (QBI) Deduction:
Deduct up to 20% of your income, subject to specific conditions.
Conclusion: Knowing about these tax deductions can really help you save some money and maybe even invest a bit more into your practice. Keeping track of your expenses and talking to a tax pro can make a big difference. Remember, every little bit helps. If you have any questions or need some support with your bookkeeping, don’t hesitate to reach out to us.
Here’s to a great year of helping others and making the most of your hard work!
