Steady Practice · For private practice

How Much Should Therapists Set Aside for Taxes? (A Practical Guide for Solo Practice)

If you've ever had a sick feeling in your stomach around April 15th — or worse, around every quarterly deadline — you're not alone.

For therapists in solo private practice, taxes work differently than they did when you had a salaried position. There's no employer withholding a chunk of every paycheck. It's on you to track what you earn, set aside what you'll owe, and send estimated payments to the IRS four times a year.

Most therapists figure this out the hard way. This post is an attempt to make it a little less painful.

Important note: this post is for general educational purposes and is not tax advice. Every practice is different. Please work with a qualified CPA or tax professional for guidance specific to your situation.

Why Taxes Hit Differently in Private Practice

When you're self-employed, you're responsible for both the employee and employer portions of Social Security and Medicare taxes — called self-employment tax. That's 15.3% on your net self-employment income (up to the Social Security wage base; the rate drops slightly above that threshold).

On top of that, you owe federal income tax at your marginal rate, plus state income tax if your state has one.

So the effective tax rate for a solo therapist earning a solid income can easily land in the 30–40% range before state taxes, depending on deductions and filing status. That's a big number. And it's one of the reasons so many therapists feel financially stressed even when the practice is going well.

The Rule of Thumb: 25–30% of Net Income

A commonly cited guideline for self-employed professionals is to set aside 25–30% of your net income (that's income after deductible business expenses) for federal taxes.

The lower end of that range — around 25% — tends to work for therapists in lower income brackets or those with significant deductions. The higher end — 28–30% or more — is safer for therapists with higher incomes or fewer deductions, or those in states with meaningful state income tax.

Here's a rough illustration:

These are illustrative estimates only. Your actual tax liability depends on your total income, filing status, deductions, and state of residence. Consult your accountant.

The Four Dates You Need to Know

The IRS expects estimated tax payments four times a year — not just in April. Missing a deadline doesn't mean the sky falls, but you may owe a small underpayment penalty. The dates to know:

• April 15 — covers Jan 1 – Mar 31
• June 15 — covers Apr 1 – May 31
• September 15 — covers Jun 1 – Aug 31
• January 15 (of the following year) — covers Sep 1 – Dec 31

If a due date falls on a weekend or federal holiday, the deadline shifts to the next business day, so confirm the exact dates each year at IRS.gov. (For the 2026 tax year they are April 15, 2026, June 15, 2026, September 15, 2026, and January 15, 2027.)

Put these in your calendar. Set a reminder a week early. It takes 10 minutes to pay online at IRS.gov once you've done it once.

Where to Keep the Money

The simplest approach: open a separate savings account labeled "taxes" and move your set-aside amount into it every time you get paid. Treat it like it's not yours — because most of it isn't.

Some therapists prefer to move money weekly (especially if you're paid session-by-session). Others batch it monthly. Either works. The key is that the money is physically separated from your operating funds before you have a chance to spend it.

Deductions That Matter for Private Practice Therapists

Your net income — the number you apply that 25–30% to — goes down when your deductible expenses go up. Common therapy practice deductions include:

• Office rent or home office (if applicable)
• Liability and malpractice insurance premiums
• EHR and practice management software subscriptions
• Continuing education courses, training, and licensure fees
• Consultation and supervision fees
• Professional association dues
• Business phone and internet (proportional share)
• Business books, journals, and subscriptions

Tracking these consistently throughout the year is what makes tax prep much less painful — and can meaningfully reduce what you owe. Your accountant can confirm what applies to your situation.

The Bigger Picture

Tax stress is one of the most common sources of financial anxiety for solo therapists. The good news: it's one of the most solvable. A consistent set-aside habit, a clear system for tracking income and expenses, and a relationship with a good CPA can take most of the uncertainty out of the equation.

If you're looking for a place to start, the Steady Practice Toolkit is a Google Sheets + Excel system built specifically for solo therapists — it includes an automatic tax set-aside calculator, a quarterly estimate planner, and income/expense tracking in one place.

→ Learn more and download the Steady Practice Toolkit here — $39 intro price, instant download.

Not tax advice. Please consult a qualified CPA or tax professional for guidance specific to your practice.