The Complete List of Tax Deductions for Occupational Therapists

Claiming eligible tax deductions can save your occupational therapy practice money. But in order to claim deductions, you need to know which expenses are deductible and which are not.

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This comprehensive list includes every tax deduction typically claimed by self-employed occupational therapists. It includes details on how and when they apply and how to calculate them—plus examples relevant to your own practice.

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Remember: Recordkeeping is key

Even if you carefully track all your practice’s expenses with Heard or another bookkeeping solution, you need to keep receipts for all expenses over $75.

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In the event of an audit, the IRS will demand receipts for every significant deduction you have claimed. A receipt proves a deduction is legitimate. If you can’t produce one, you’ll be liable for the amount you originally claimed as a deduction. You may also need to pay fines.

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The IRS can request tax records going back up to six years. So keep receipts for all your occupational therapy practice’s expenses organized and carefully stored for at least that long.

The standard deduction vs. itemized deductions vs. deductible business expenses

Two types of deductions reduce your tax burden when you run your own business: personal deductions and business deductions.

Personal deductions

Personal deductions have to do with you, personally, and not your business. You report them on Schedule A (Form 1040).

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You can file your personal deductions either by itemizing them or claiming the standard deduction.

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Itemized deductions include expenses like mortgage interest, real estate taxes, property taxes, as well as medical and dental fees. They also include state and local tax (SALT).

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Rather than itemizing these deductions, you may instead claim the standard deduction. It’s a flat rate. Starting in 2025, the standard deduction for single filers is $15,750.

Business deductions

Business deductions are related to the operation of your business, not your activities as an individual.

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You report business deductions on:

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Schedule C (Form 1040) if you’re a sole proprietor or an LLC filing as a pass-through entity
Form 1120 if your business is a C corporation
Form 1120-S if your business is an S corporation
Form 1065 if your business is a partnership or an LLC filing as a partnership (with each partner filing a Form 1040 separately)

Can you claim both the standard deduction and business deductions?

Yes, you can definitely claim both the standard deduction and itemized business deductions.

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But many practice owners new to filing business taxes get confused here.

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Since you can either claim the standard deduction or itemized deductions, they believe that they also have to choose between the standard deduction and business deductions.

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However, the standard deduction applies to your personal taxes, while business deductions apply to your business taxes.

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If you’re a sole proprietor or an LLC filing as a sole proprietorship, you report all your business tax deductions Schedule C (Form 1040). If you file as a corporation or partnership, you report business deductions on your corporation or partnership return.

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Your standard deduction or itemized deductions, meanwhile, go on Schedule A (Form 1040).

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No matter which personal deductions you claim, or how your business is structured, you can claim tax deductions for your business.

Advertising and marketing

The cost of marketing or advertising your occupational therapy practice is 100% tax deductible.

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Eligible expenses include:

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Mail or print ads
Online advertising
Website design and updates
Professional headshots
Logo design
SEO tools
Business cards
Brochures
Sponsorships
Promotional items keychains, calendars, or mugs
Monthly fees to list your practice in online directories

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There are a few exceptions to watch out for:

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Signage: Any sign you put to use for one year or longer must be deducted as a depreciable asset. (More on that below.) Any temporary signs used for less than one year may be written off as marketing and advertising expenses.
Vehicle ads: You can deduct the cost of putting promotional materials for your practice on your vehicle, but other costs like fuel or maintenance should be filed as vehicle deductions
Recruitment: If you pay to post job positions, the cost is tax deductible, but not as an advertising expense.

Accounting and bookkeeping

Accounting and bookkeeping are essential for tracking finances and filing taxes for your occupational therapy practice. Their cost is also 100% tax deductible.

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That includes the cost of:

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An accountant (whether kept on retainer or hired only for tax prep)
A bookkeeper
A tax advisor
Accounting software
Financial management tools like Heard

Business meals

If a business meal qualifies as a business expense, 50% of its cost is deductible from your taxes.

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In order to qualify, you must:

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Purchase the meal from a qualifying establishment. Usually, this means a restaurant with either takeout or sit down service. Ingredients for meal prep, or food purchased for anything other than immediate consumption, do not qualify.
Purchase the meal during a business trip or share it with a business associate. (More on business travel deductions below.)
Make sure the meal is not “lavish or extravagant under the circumstances.” A burger and fries for lunch would qualify. A nine-course meal with wine pairings would not.

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Unless you frequently travel as part of your job as an occupational therapist, most meals you deduct will be ones you purchase for yourself and one or more business associates.

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In the words of the IRS, a business associate is “a person with whom the taxpayer could reasonably expect to engage or deal in the active conduct of the taxpayer's trade or business such as the taxpayer's customer, client, supplier, employee, agent, partner, or professional adviser, whether established or prospective.”

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If you plan to deduct a business meal, be sure to keep the following information for your records:

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The total cost
The date of the meal
The location
The business purpose of the meal
Who was present at the meal

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In the event of an IRS audit, you will need this information in order to justify your tax deduction.

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Business travel

If you travel in order to:

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Treat clients at their home or care facilities
Work in a clinic or a hospital as part of a business contract
Attend a conference
Give a talk, teach a class, or facilitate a workshop

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…then you are able to deduct some—if not most—of the cost of travel.

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In order to qualify for a business travel deduction, your trip must:

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Take you outside your tax home, the place where your business is based.
Take you away from your tax home for longer than one work day.
Mostly be spent doing business. For example, if you are away for four days, and you spend three of those days at a conference, and the fourth day sightseeing, it counts as a business trip. Reverse that—spend three days sightseeing, and one day at a conference—and it’s not a business trip.
Be “ordinary and necessary.” For example, If you have the choice between flying First Class or Economy, choosing First Class could stretch the limits of “ordinary and necessary.”
Be planned in advance. The IRS tried to prevent business owners from tacking on professional activities to recreational trips in order to claim business expenses. Prepare a written itinerary and travel plan, and book transportation and lodging well in advance. That will help to prove the trip was primarily business related.

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You can deduct the cost of travel to your destination, and the cost of lodging once you arrive. You can also deduct:

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Baggage fees
Rental car costs
Laundry and dry cleaning
50% of business meals (i.e. with business associates) from qualifying establishments
50% of meals eaten, while traveling, at qualifying establishments

Bank fees

Two types of bank fees qualify as deductible business expenses:

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Overdraft fees
Maintenance fees

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Overdraft fees are only incurred when you overdraw an account. Maintenance fees are charged monthly. You can record them in your books as a regular expense and deduct them from your taxes.

Vehicle use

If you frequently drive places in order to treat clients as an occupational therapist, you can deduct the cost of using your vehicle.

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Note: “Business activities” do not include your regular commute to work. You must be travelling to a location other than your primary business location in order to qualify.

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So, travelling to a client’s home or care facility would qualify you for the vehicle use deduction. Driving to your own clinic would not.

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There are two ways you can calculate your vehicle use tax deduction: by mileage rate and by actual expenses.

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If this is your first year using your vehicle for work, you can file your deduction using either the mileage rate method or the actual expenses method. However, if you use the actual expenses method the first year you claim the vehicle use deduction, you must continue to use it for the life of the vehicle.

Mileage rate

To deduct your vehicle expenses using the mileage rate method:

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Calculate the total number of miles you traveled for work
Multiply the total number of miles by the IRS mileage rate for the tax year

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The mileage rate was 70 cents per mile for the 2025 tax year.

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If you use the mileage rate method, you can’t include any other expenses such as oil changes or routine maintenance and repairs. However, you may deduct the cost of parking fees or tolls.

Actual expenses

To write off actual expenses:

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Calculate how much of your time on the road is devoted to business
Multiply your business use percentage by all your vehicle expenses for the year

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‍For instance, if you drove 20,000 miles last year, and 2,000 of the miles you travelled were spent travelling to clients’ homes or care facilities, you could deduct 10% of your total vehicle expenses.

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Eligible vehicle expenses include:

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Fuel
Lease payments
Oil and other fluids
Parking fees
Garage or parking space rental
Repairs
Tire replacement
Licenses and registration
Insurance
Depreciation on the vehicle

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If you use the actual expenses method one year, then you must use it again every subsequent year you deduct mileage from your taxes.

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Whichever method you use to deduct vehicle expenses, be sure to keep detailed records.

Membership fees

The cost of membership in a professional organization is tax deductible.

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Examples include the American Occupational Therapy Organization (AOTA) and National Board for Certification in Occupational Therapy, Inc. (NBCOT), and your state occupational therapy organization.

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You can also deduct the cost of membership in your local chamber of commerce, plus membership in any public or civic organizations related to occupational therapy.

Continuing education

You can deduct the cost of courses, workshops, and certification programs related to occupational therapy. To do so, the education you purchase must meet at least one of two criteria:

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It helps you improve upon or maintain the skills you need to work as an occupational therapist
It’s required in order for you to maintain your certification as an occupational therapist

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You can’t deduct the cost of any education necessary to meet the minimum requirements to become an occupational therapist.

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For instance, the schooling you complete so you can become certified as an occupational therapist in your state is not tax deductible. But any additional training you do after you’re certified is most likely tax deductible.

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You also can’t deduct the cost of education you undertake in order to change professions.

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For instance, if you’re currently an occupational therapist but you decide to return to school and become a physical therapist, you can’t deduct the cost of education from the taxes for your occupational therapy practice.

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Some additional education costs you can deduct:

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Books, journals, and trade magazines related to occupational therapy
Learning supplies (stationery, note-taking apps, etc.)
Supervision

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Rent (including home-based businesses)

The cost of renting a space for your practice is tax deductible. The cost of utilities (heat, water, electricity, internet, phone) is also deductible.

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If you work from home, you can deduct a portion of your mortgage payments or rent, as well as your utilities with the business use of your home deduction.

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To qualify for this deduction, you must use your home-based work space:

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Exclusively, meaning you have a separate area where you work. This may be a separate room in your home, or a portion of a room. The primary use of the area should be for work.
Regularly, meaning you keep recurring work hours in the area. If you use your desk on random occasions to catch up on emails, the area won’t qualify as a home office.
With precedence, meaning it’s your number one place of business. For instance, you don’t spend 90% of your working hours at your clinic, then use your spare room to do paperwork.

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If you qualify, you can deduct a percentage of your home’s rent or mortgage payments, plus the cost of utilities (including routine repair and maintenance), that corresponds to the percentage of your home you use for your occupational therapy practice.

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There are two ways to claim this deduction: with the business use of your home regular method or with the simplified method.

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Before choosing one, crunch the numbers. Depending on your circumstances, one method may result in a bigger tax write-off than the other.‍

‍The business use of your home regular method‍

To calculate your home-based business deduction using the regular method:

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Determine the square footage of your workspace‍
Calculate the square footage of your entire home
Divide your workspace square footage by your home’s square footage

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The resulting percentage is the amount you can claim on your tax return as a business use of your home.

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For instance, if your workspace was 100 square feet, and your entire home was 2,000 square feet, the calculation would look like this:

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‍100 / 2,000 = 0.05 or 5%

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Following this example, you can deduct 5% of your combined mortgage payments/rent and utilities for the year.

The business use of your home simplified method‍

Rather than calculating the percentage of your home you use for work, the simplified method deducts a flat rate per square foot.

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Using the simplified method, you can deduct $5 per year for each square foot of your home you use for business, up to a maximum of 300 feet.

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Business equipment and supplies

The cost of any item you use to run your business or treat clients is a tax deductible expense.

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That includes general purpose and office equipment like:

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Printers, photocopiers, and phones
Printer or photocopier ink or toner
Printer paper
Furniture
Office artwork
Storage bins

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It also includes items specific to occupational therapy, like:

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Gait trainers
Pediatric walkers and rollators
Pediatric standers
Standing frames
Vestibular therapy devices
Special needs strollers
Pediatric seating
Multisensory devices
Gross motor tools
Hand therapy devices
Communication tools
Sensory motor and perceptual activity tools
NeuroMedical devices
Weighted products
Tactile stimulation devices

Employee and contractor salaries, wages, and benefits

If you have employees on payroll, or if you hire contractors, the cost of wages, fees, and salaries is 100% tax deductible.

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You can also deduct the cost of employee benefits, including:

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Contributions to retirement plans
Health insurance premiums, provided at least 70% of employees are insured
Paid leave, provided it is part of a formal company policy

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Also, fringe benefits like life insurance premiums, childcare assistance, and educational assistance programs may also be deductible so long as they meet IRS requirements.

Square, Stripe, and other payment processor fees

If you use Square, Stripe, or other payment services to collect funds from clients, the payment service fees are 100% tax deductible.

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‍The deduction applies both to flat monthly fees you pay to use these services and to any percentages of your revenue they collect.

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Check the app for the service you use. Most offer reports telling you how much you paid in fees each year.

Booking and billing software

Subscription costs of software you use for booking client appointments is 100% tax deductible. The same goes for any software you use to invoice clients or provide them with receipts.

Electronic health record (EHR) tools

The cost of EHRs or practice management tools is 100% tax deductible as a business expense.

Professional liability insurance

Professional liability insurance protects your occupational therapy practice from claims of malpractice or negligence in the rendering of professional services.

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Provided it is considered an ordinary and necessary business expense for your profession, professional liability insurance is typically considered tax deductible. If you’re not sure whether professional liability insurance is ordinary and necessary, consult with your licensing board or professional organization.

General liability insurance

While professional liability insurance protects you from malpractice claims, general liability insurance protects your business from property damage or claims of bodily harm.

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As with professional liability insurance, the cost of general liability insurance premiums are tax deductible. Make sure to document all payments made towards your policy and keep records of your receipts.

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Student loan interest

The principal of your student loans is not deductible.

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But there is some good news: you may be able to write off the interest.

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If you pay over $600 in interest during the course of the year, you can claim the expense on your tax return.

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However, you can only claim this deduction if your adjusted gross income (AGI) is $85,000 or less, and the maximum amount you can write off each year is $2,500.

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Technically, this is not a business expense. It’s an itemized personal deduction, meaning you claim it on your personal tax return. But it can help to take the sting out of monthly student loan payments.

The Qualified Business Income (QBI) deduction

Taking advantage of the QBI deduction, you can deduct up to 20% of your income from your taxes. Your practice likely qualifies for the full amount of this deduction if:

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It’s a pass-through entity (a sole proprietorship, an S corporation, a partnership, or an LLC filing as either of those business structures)
Its taxable income for the year is $182,100 or less

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If you earn in excess of $182,100, you may qualify for a partial deduction.

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There are a few more factors to take into account before claiming the QBI deduction. Check out this article on the QBI deduction for therapists—it applies not only to therapists but to most health and wellness businesses.

Pass-through entity tax (PTET)

If your practice is a pass-through entity like an S corporation or a partnership, and you operate in a state with pass-through entity tax (PTET), you may be able to deduct state and local taxes as a business expense.

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Individual tax filers can deduct the cost of state and local taxes using the state and local tax (SALT) deduction. But this deduction has a cap: from 2025 to 2029, the cap is $40,000; after 2029, it’s scheduled to revert to its previous $10,000 limit.

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The majority of states allow pass-through entities to pay PTET as an alternative to SALT. Since it is deducted on your business tax return—not your individual tax return—PTET has no limit.

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Consult with your Secretary of State to find out whether you are eligible for PTET, and work with an accountant to determine the best strategy for your practice.

A note on depreciating business assets

Some equipment or tools you purchase for your occupational therapy practice may qualify as depreciable assets.

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A depreciable asset is any fixed, tangible business asset with a useful life of 12 months or more:

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“Fixed” means it’s not easily converted to cash, and you put it to long-term use as part of your business activities.
“Tangible” means it has a physical presence (e.g. a swing for vestibular rehabilitation therapy is tangible, but your website is not).
“Useful life” is the amount of time an asset can be put to use before it wears out or becomes obsolete.

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When you depreciate an asset, you deduct the total cost of purchasing it over multiple years according to its amortization period.

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The amortization period is the number of years over which you depreciate an asset. Different types of assets have different amortization periods. Typically, an item with a longer useful life has a longer amortization period.

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Businesses usually only depreciate large assets, not small ones. For instance, it may make sense to depreciate a $2,000 gait trainer, but it does not make sense to depreciate a $50 grab bar.

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One of the benefits of depreciating an asset on your tax returns is that you can claim the maximum deduction possible. That’s because the maximum amount you can deduct from your taxes in a given year is limited by the amount you owe.

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Before purchasing any major assets for your business, consult with an accountant to determine a depreciation strategy that works for you.

Key takeaways

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Tax deductions take the form of either personal expenses (certain costs related to you as an individual) or business expenses (costs related to your business)
Keep receipts for every business expense you deduct on your taxes so you can back up your claims in the event of an IRS audit.
Occupational therapist practices qualify for the QBI deduction; it’s worth your time to find out whether you can claim it
If you purchase a large fixed asset, in order to reap the most tax benefits, you should depreciate the expense
Consult with a qualified accountant before claiming any business expenses you’re unfamiliar with, or for help depreciating large assets or claiming pass-through entity tax (PTET)

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First year filing taxes for your therapy practice? Check out our article on tax planning for therapists.

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post.

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Bryce Warnes is a West Coast writer specializing in small business finances.

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