Running a therapy practice comes with significant operating costs, from rent and clinical supplies to software, continuing education, marketing, and professional fees.
Many legitimate business expenses may reduce taxable business income when they meet IRS requirements. The basic standard is that a business expense generally needs to be ordinary and necessary for operating the business. The exact deduction, timing, and limitations can depend on the expense, business structure, and individual tax situation.
There are also several important changes therapy practice owners should know about for 2026, including a permanent Qualified Business Income deduction, higher Section 179 limits, permanent 100% bonus depreciation for certain property, and a midyear increase in the business mileage rate.
What Tax Deductions Can Therapy Practice Owners Claim in 2026?
Therapy practice owners may be able to deduct ordinary and necessary business expenses such as office rent, marketing, EMR and software subscriptions, professional fees, clinical supplies, qualifying continuing education, insurance, and business vehicle expenses. Equipment may also qualify for Section 179 or bonus depreciation, while eligible pass-through business owners may qualify for the QBI deduction.
Eligibility depends on the specific expense and the practice’s tax circumstances, so records should be maintained and major deductions reviewed with a qualified tax professional.
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Key Takeaways
- The Qualified Business Income deduction is now permanent for eligible taxpayers.
- The 2026 Section 179 deduction limit is $2.56 million, subject to eligibility rules and phaseouts.
- Certain qualifying business property acquired after January 19, 2025 may qualify for 100% bonus depreciation.
- The 2026 business mileage rate is 5 cents per mile through June 30 and 76 cents per mile beginning July 1.
- Therapy practices should distinguish recurring business expenses, such as software subscriptions, from equipment purchases that may be subject to depreciation rules.
- Physical therapy and similar healthcare services can be treated as a Specified Service Trade or Business for QBI purposes, making income thresholds especially important.
1. Marketing and Advertising
Marketing expenses incurred to promote a therapy practice may generally qualify as business expenses when they are ordinary and necessary.
Examples can include:
- Google Ads and other paid search campaigns
- Social media advertising
- Website hosting and maintenance
- Printed brochures and flyers
- Local sponsorships
- Email marketing platforms
- Graphic design and marketing services
The important distinction is that the expense should have a legitimate business purpose.
Rather than assuming every marketing purchase receives identical tax treatment, keep invoices and records that show how the expense relates to the practice.
2. Office Rent and Utilities
For practices leasing clinical or administrative space, rent paid for business premises may generally be deductible as an operating expense.
Related expenses may include:
- Electricity
- Water
- Internet service
- Business phone service
- Cleaning
- Other costs required to operate the location
What About a Home Office?
Self-employed therapists who perform administrative work from home may qualify for a home office deduction if IRS requirements are met.
Generally, the area must be used regularly and exclusively for business, and it must meet requirements such as being the principal place where administrative or management activities are conducted or a qualifying location where patients or clients are regularly met.
Occasionally working from a kitchen table does not automatically create a qualifying home office.
3. EMR, Practice Management, and Business Software
Technology is now a routine operating expense for therapy practices.
Examples may include:
- EMR software
- Practice-management systems
- Scheduling software
- Billing platforms
- Accounting software
- Secure communication tools
- Website and productivity software
A recurring software subscription used for the business may generally be treated differently from purchased software or equipment that must be capitalized or depreciated.
The IRS recognizes ordinary and necessary business software and technology costs in appropriate circumstances, although the treatment depends on how the software is acquired and used.
For that reason, practices should not automatically assume that every software purchase qualifies for Section 179.
4. Professional Licenses, Fees, and Business Services
Costs required to operate and maintain an established therapy practice may include:
- State professional license renewals
- Business licenses
- Professional association dues
- Accounting services
- Tax preparation related to the business
- Legal services related to business operations
- Credentialing or administrative services
The IRS generally allows ordinary and necessary legal and professional fees directly related to operating a business. Costs associated with acquiring an asset or personal services may receive different treatment.
Keep personal and business expenses separated whenever possible.
5. Clinical Equipment and Office Supplies
Therapy practices frequently purchase equipment ranging from resistance bands and treatment tables to computers and larger rehabilitation equipment.
Small supplies may often be handled as ordinary business expenses, while larger equipment purchases can fall under depreciation rules.
Section 179 in 2026
For tax years beginning in 2026, the maximum Section 179 deduction is $2,560,000.
The deduction begins to phase down when the cost of Section 179 property placed in service during the year exceeds $4,090,000.
Most smaller therapy practices will never approach those limits, but eligibility still depends on the type of property, business use, taxable income, and other rules.
100% Bonus Depreciation
Federal law also restored permanent 100% additional first-year depreciation for certain qualified property acquired and placed in service after January 19, 2025.
Certain computers, equipment, and other depreciable property may qualify.
Section 179 and bonus depreciation are not interchangeable in every situation, so significant equipment purchases are worth discussing with a tax professional before filing.
6. Continuing Education
Professional education can be an important expense for PTs, OTs, SLPs, and other clinicians.
Qualifying work-related education may be deductible for a self-employed professional when it:
- Maintains or improves skills needed in the person’s existing work, or
- Meets requirements imposed by an employer or law to maintain the current professional role.
However, education generally does not qualify as a business deduction if it is required to meet the minimum requirements of the current profession or qualifies the person for a new trade or business.
Potential expenses may include eligible:
- Continuing education courses
- Certification programs
- Conference registration
- Professional books
- Educational subscriptions
- Certain travel associated with qualifying education
7. Professional and Business Insurance
Common business insurance costs can include:
- Professional liability coverage
- General liability insurance
- Business property coverage
- Workers’ compensation
- Cybersecurity or data-breach coverage
- Other policies used to protect the practice
Whether a specific premium is deductible depends on the type of coverage and circumstances, but legitimate insurance costs associated with operating a practice should be included in the annual expense review with the practice’s accountant.
8. Business Mileage and Vehicle Expenses
This is particularly relevant for mobile therapists, home-care providers, and owners traveling between practice locations.
The IRS changed the business mileage rate during 2026:
Period | Business Mileage Rate |
January 1 to June 30, 2026 | 72.5¢ per mile |
July 1 to December 31, 2026 | 76¢ per mile |
The IRS increased the rate effective July 1 because of changes in vehicle operating costs.
That means practices using the standard mileage method need to maintain accurate mileage records and apply the correct rate to the appropriate part of the year.
Business travel should also be distinguished from normal commuting, which generally receives different tax treatment.
What Changed With the QBI Deduction in 2026?
The Qualified Business Income deduction under Section 199A is now permanent rather than expiring after 2025. Eligible owners of pass-through businesses may potentially deduct up to 20% of qualified business income, subject to several limitations.
This deserves special attention for therapy practices.
Healthcare services fall within the IRS’s Specified Service Trade or Business (SSTB) rules. IRS guidance specifically includes physical therapists and similar healthcare professionals in the health category.
For 2026, the QBI taxable-income threshold is:
- $403,500 for married taxpayers filing jointly
- $201,750 for most other filers
- $201,775 for married taxpayers filing separately
Above those thresholds, additional limitations and phase-in rules apply.
This means a therapy practice owner’s eligibility cannot be determined simply by saying, “My business is an LLC” or “I own an S corporation.”
Income, business structure, compensation, and SSTB rules all matter.
Keep Records That Support the Deduction
The most useful tax strategy is often less exciting than finding another deduction.
It is maintaining reliable records.
Therapy practice owners should have a system for retaining:
- Receipts and invoices
- Business software charges
- Professional dues
- CE records
- Mileage logs
- Equipment purchases
- Rent and utility records
- Professional-service invoices
- Marketing costs
Good records make it easier for the practice and its tax professional to identify expenses correctly and support them later if questions arise.
How HelloNote Fits Into the Financial Workflow
An EMR does not determine whether an expense is tax deductible, and HelloNote should not be used as a substitute for professional tax advice.
What technology can do is reduce fragmentation across the practice.
HelloNote brings scheduling, documentation, billing, reporting, and practice-management workflows together so clinic owners have a clearer view of day-to-day operations.
For practice owners, keeping operational information organized throughout the year can make financial reviews easier than trying to reconstruct activity after year-end.
Spend Less Time Reconstructing Your Practice Data
Your clinical and administrative workflows already generate important operational information.
HelloNote helps PT, OT, SLP, and other rehabilitation practices keep those workflows connected in one platform.
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Frequently Asked Questions
What business expenses can a therapy practice deduct in 2026?
Therapy practices may be able to deduct ordinary and necessary business expenses such as rent, marketing, professional fees, business software, supplies, qualifying continuing education, insurance, and vehicle expenses. Specific eligibility depends on the expense and the taxpayer’s circumstances.
Can a therapy practice deduct EMR software?
A business-use EMR or practice-management subscription may generally qualify as an ordinary and necessary operating expense, depending on how the software is purchased, structured, and used. Practices should confirm the treatment of significant software purchases with their tax professional.
What is the Section 179 limit for 2026?
The Section 179 deduction limit for tax years beginning in 2026 is $2,560,000, with the deduction beginning to phase down when qualifying property placed in service exceeds $4,090,000. Other eligibility and income limitations apply.
Is the QBI deduction still available in 2026?
Yes. The Qualified Business Income deduction was made permanent. Eligible owners may potentially deduct up to 20% of qualified business income, although income limits and SSTB rules can significantly affect therapy practice owners.
What is the business mileage rate for therapists in 2026?
For eligible business driving, the standard mileage rate is 72.5 cents per mile from January 1 through June 30, 2026 and 76 cents per mile from July 1 through December 31, 2026.
Can continuing education be tax deductible for therapists?
Qualifying work-related education may be deductible for self-employed professionals when it maintains or improves skills needed in their current work or meets requirements to maintain their existing professional role. Education that qualifies someone for a new trade or profession generally does not meet the same rule.
Final Thoughts
The goal of tax planning is not to claim every expense that looks business-related.
It is to identify legitimate deductions, maintain the records that support them, and apply the current tax rules correctly.
For therapy practice owners, the biggest 2026 developments are the permanence of the QBI deduction, higher Section 179 limits, permanent 100% bonus depreciation for qualifying property, and the updated business mileage rates.
Review those changes with a CPA, enrolled agent, or other qualified tax professional before making major tax or equipment-purchase decisions.
Disclaimer
This article is for general educational purposes only and does not constitute tax, accounting, legal, or financial advice. HelloNote is not a tax advisory firm. Federal, state, and local tax rules vary by taxpayer and can change. Consult a qualified CPA, enrolled agent, tax attorney, or other tax professional regarding your practice’s specific circumstances.
