What Private Practice Owners Need to Know About the New 2025 Tax Law Changes

Julie Herres
Jul 29
5 min read

Updated: Sep 22

If you're a therapist in private practice, you may have heard rumblings about a new tax bill making waves in Washington. It’s called the One Big Beautiful Bill Act (yes, really), and while the name might sound a bit over-the-top, the tax law changes it introduces are very real—and very relevant to you as a business owner.

While the IRS hasn’t released final guidance or updated tax forms yet, there are already several key takeaways you should be aware of as you plan for the rest of 2025 and beyond. Let’s break it down without the jargon and in a way that actually makes sense for your practice.

A Quick Reminder: You Are a Business Owner

Before we dive in, let’s not forget this: As a therapist in private practice, you are both a clinician and a business owner. That means your tax strategy needs to work for both your business and your personal finances.

This new law affects both sides of that equation.

Beware of Misinformation

Also important: there is a lot of misinformation floating around on social media about this bill. Because the House and Senate versions differed and changed many times before final passage, it’s easy to get confused by outdated or incorrect summaries. Always get your updates from a reputable source.

1. Good News: Many of the "Temporary" Tax Cuts Are Now Permanent

Several provisions from the 2017 Tax Cuts and Jobs Act were set to expire at the end of 2025—but the new bill makes many of them permanent (with some enhancements).

Here’s what that means for you:

The Qualified Business Income (QBI) deduction is here to stay. If your business is a pass-through entity, like a sole proprietorship, S-Corp or partnership, you may qualify for a 20% deduction on your business profit. Starting in 2026, there’s a new a $400 minimum deduction if you earn at least $1,000 in qualifying income, and the income limits to qualify have increased.
However, because therapy is considered a "Specified Service Trade or Business" (SSTB), high earners will phase out of eligibility for the QBI deduction. If your income is above the new thresholds, you may not qualify.
The Standard Deduction is slightly higher. Most people take the standard deduction instead of itemizing, and for 2025 it increases slightly to $31,500 (for those married filing jointly, half for single or married filing separately).
Estate and gift tax exclusions will reset to $15 million in 2026. The exemption was scheduled to drop significantly, but the new law sets it at $15 million and adjusts for inflation each year. This mostly impacts high-net-worth families, but is helpful to know if you’re planning long-term wealth transfers.
Child Tax Credit made permanent: $2,200 per child (with up to $1,400 refundable). Phaseouts start at $200K (single) and $400K (married filing jointly).

2. SALT Deduction Cap Temporarily Increased (With a Catch)

If you live in a state with high income or property taxes, this deduction matters.

The cap on the State and Local Tax (SALT) deduction increases from $10,000 to $40,000 in 2025—but only temporarily. It starts phasing out once your household income (MAGI) exceeds $500,000 and will reset to $10,000 again in 2030.

Pro Tip: If you’re in a PTET-eligible state (Pass-Through Entity Tax) and already using that structure, the PTET deduction might still be better.

3. No Big Surprises for Business Owners (and That's a Good Thing)

If your practice is taxed as an S-Corp or partnership (or you’re considering making that switch), this new law doesn’t throw any curveballs your way. That’s great news!

PTET rules are unchanged. The 20% Qualified Business Income (QBI) deduction is still available (subject to phaseouts). And bonus depreciation is back at 100% for purchases made after Jan 19, 2025. That means qualified leasehold improvements or furniture investments can be written off in full instead of depreciated over multiple years.

If your practice is growing or you’ve been considering upgrades, 2025 could be a good year to make those moves.

4. A Few New Deductions (That Probably Don’t Apply to You)

The new law introduces a handful of shiny new deductions—but most won’t impact private practice owners. For example:

Tips deduction? The tips deduction will only apply to occupations that customarily and regularly received tips on or before December 31, 2024, as determined by the Treasury Secretary. Therapy is not expected to be on that list.
Overtime deduction? Only for W-2 employees and just the extra pay above regular hourly wages. While this might benefit your hourly admin, it’s unlikely to benefit business owners or clinicians.
Car loan interest deduction? Only applies to personal-use vehicles bought in 2025, assembled in the U.S., and under a strict income threshold.

If you’re exploring any of these deductions, make sure you qualify before relying on them.

5. HSAs, Charitable Giving, and Other Personal Finance Changes

Looking ahead to 2026 and beyond, there are a few changes on the personal side worth flagging:

HSAs (Health Savings Accounts) will be easier to use with more types of insurance plans. Concierge care is now eligible.
Charitable giving deductions will shift slightly. If you don’t itemize, you’ll be able to deduct up to $1,000 ($2,000 if married filing jointly). If you do itemize, you’ll only be able to deduct donations that exceed 0.5% of your income.
The Clean Vehicle Tax Credit ends after Sept. 30, 2025. If you were planning to buy an electric car and want the credit, act soon.

What Should You Do Now?

The best thing you can do now is stay informed (through a reputable source), and work with a professional who understands the unique needs of private practice owners.

While this new law isn’t a complete overhaul, it does offer some planning opportunities—especially for those in high-tax states or at higher income levels.

Final Thought

These changes aren’t scary—but they do make it more important than ever to plan ahead. As always, our team is here to help you keep your practice profitable, your taxes optimized, and your financial life running smoothly.

GreenOak Accounting only offers tax preparation for our ongoing monthly accounting clients—which is a great reason to become one! If you're looking for expert guidance and proactive financial support for your private practice, we'd love to connect.

Disclaimer:

This content is for educational and informational purposes only and is not intended as tax advice. It does not include every provision in the new law and reflects information available at the time of publication. Final IRS guidance and updated tax forms are still pending. Please consult your tax professional to understand how these changes apply to your specific situation.

This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney, or advisor regarding your particular facts and circumstances.

GreenOak Accounting specializes in working with private practice owners across the United States. For more information on our services, visit our website.