What Tax Deductions Can Mental Health Professionals Take?

As a mental health professional, you spend your days taking care of others. The least Uncle Sam (aka the IRS) can do is cut you a little break on your taxes, right?

Well… the good news is that they kind of already do!

If you’re a therapist, psychologist, or other mental health professional running your own practice—or working as a 1099 therapist contractor—you’re generally eligible for business tax deductions. Starting a mental health business comes with its challenges. These reduce your taxable income, which means a lower tax bill for you. Sweet, right?

So what is a business deduction, exactly? You’ve probably heard of it as a “write off,” but it’s simply an expense that is related to your business that you can report on your tax return to reduce how much of your income is taxed.

Let’s break down the most common tax deductions you should be tracking, and how to do it right so you can keep more of your hard-earned money!

Why Financial Reporting and Tax Planning Actually Matters

Anything with the word “tax” probably makes your shoulders tense up. No one’s sitting around thinking, “Wow, I just love giving a portion of my income to the government.”

That’s why we try to reduce that stress burden with tax planning—so we can attempt to give less of that income to the government (legally, of course).

But tax planning isn’t just about filing in April and crossing your fingers. Real tax planning requires thinking ahead, tracking the right things, and finding ways to reduce your tax burden throughout the year. In an ideal world, that means you’ll see a smaller bill when tax season rolls around as you did your due diligence with financial reporting and tax planning.

One of the easiest ways to do that? Know what’s actually deductible throughout the year. Don’t overpay Uncle Sam if you don’t have to.

Common Tax Deductions for Therapists and Mental Health Professionals

As a business owner (whether you’re a solo private practice, group practice owner, or 1099 therapist contractor), you can deduct eligible business expenses. If you pay for something that’s related to your work, there’s a good chance it’ll qualify. 

Here are some common expenses that are likely deductible in your practice:

• Office rent (this can be a big one if you have an in-person office)
• Office supplies and furnishings
• Professional dues and memberships
• Malpractice insurance
• Marketing expenses (website, Psychology Today, business cards, digital ads, etc.)
• Software (SimplePractice, TherapyNotes, GSuite, scheduling tools, etc.)
• Professional development (continuing education, seminars, workshops, etc.)
• Business-related travel
• Licensing fees
• Professional services (CPA, attorney, financial advisor, etc.)

This isn’t a complete list, but it’s a solid starting point.

Home Office & Teletherapy Expenses

If you work from home (even part-time), you might qualify for the home office deduction. 

Here’s generally how it works:

• Home Office Space – The space must be used exclusively and regularly for your practice. It doesn’t need to be a separate room, but it can’t double as your guest bedroom or home gym.
• Internet & Phone – If you use your home internet or phone for business, you can deduct a portion of the cost based on your business use.
• Teletherapy platforms – Zoom Health, Doxy.me, and other HIPAA-compliant video services can be deducted.

There are two ways to calculate your home office deduction:

1. Simplified method – $5 per square foot (up to 300 sq. ft.). Yes - you need to have an idea or actually measure your home office area!
2. Actual expense method – You deduct a portion of your actual home expenses (rent, utilities, insurance, etc.) based on the square footage.

Not sure which gives you a bigger deduction? Your tax person or financial advisor can run both and help you decide.

Mileage, Travel & Client-Related Expenses

Do you travel for CE workshops, networking events, or conferences? Great! Those expenses might be deductible too.

• Mileage – Track your business-related driving using an app like MileIQ or QuickBooks. For 2025, the IRS mileage rate is 70 cents per mile (it adds up quickly).
  Travel – Flights, hotels, meals (up to 50% deductible), and transportation may count (as long as it’s for business). Even networking events or CE weekends may count!
• Client/patient expenses – Therapy materials or anything else directly related to the services you provide.

Pro tip: keep all of your receipts and jot down details like the date, location, and purpose. QuickBooks or other software can help streamline this process.

What You Can Deduct Depends on How You’re Paid

This part gets overlooked a lot. It matters whether you’re a W-2 employee, 1099 therapist contractor, or both.

• W-2 Employee – You generally can’t deduct business expenses. (Boo!)
• 1099 Contractor – You can deduct eligible business expenses directly on your tax return. This is where tax savings really come into play.
• Both W-2 and 1099 – You can still deduct expenses related to your 1099 work, even if you’re also a W-2 employee elsewhere.

So make sure you know which bucket(s) you fall into as it impacts what you can claim.

Should You Work With a Financial Advisor or Tax Pro?

If you’re overwhelmed, confused, or just plain tired of guessing during tax season, it might be time to get some help. A solid team can take this stuff off your plate so you can focus on what actually matters to you: whether that’s helping others or scaling your practice.

Here’s what to look for:

• Someone who understands the mental health field (and speaks your language).
• Someone who explains things like a human (not a tax robot).
• Someone who does more than plug numbers into an application like TurboTax.
• Someone collaborative, responsive, and there to be your partner.

At Marrone Wealth Management, this is our thing. We specialize in financial planning for therapists and mental health professionals. We know your world, understand your business, and can help you keep more of what you earn.

We also have a team of experts ready to help with everything from calculating quarterly estimates to actually filing your tax returns.

Start tracking your expenses now. Stay organized. And ask for help when you need it!

Let’s connect—we’d love to help.