LLC vs S corp for therapists (2026)
At $70,000 of profit, an S corp election saves a therapist money over a sole proprietorship in 2 of 51 states, with a $49,000 salary. Pick your state for the calculator with these numbers filled in.
- The IRS treats this work as a specified service trade or business, so the 20% QBI deduction phases out above $201,750 of taxable income (single). Counseling is a health service under Treas. Reg. 1.199A-5(b)(2)(ii), which covers medical services by practitioners in the field of health. law.cornell.edu
- Many states make licensed professionals use a professional LLC or professional corporation, and California does not let an LLC render services that need a state license, so check the state board before forming. leginfo.legislature.ca.gov
- Median pay for employees in this job: $59,350 (BLS, May 2025).
| State | Sole proprietor | S corp | Saving |
|---|---|---|---|
| District of Columbia | $19,699 | $18,935 | $764 |
| South Carolina | $15,985 | $15,893 | $92 |
| Nebraska | $16,599 | $16,787 | +$188 |
| Louisiana | $15,910 | $16,113 | +$203 |
| Alabama | $17,331 | $17,586 | +$255 |
| Missouri | $16,463 | $16,723 | +$260 |
| Arizona | $15,576 | $15,838 | +$262 |
| Virginia | $17,270 | $17,536 | +$266 |
| Mississippi | $16,213 | $16,486 | +$273 |
| Iowa | $16,203 | $16,510 | +$307 |
| Michigan | $16,857 | $17,175 | +$318 |
| Kansas | $17,173 | $17,495 | +$322 |
| West Virginia | $16,433 | $16,755 | +$322 |
| Indiana | $16,233 | $16,568 | +$335 |
| Georgia | $16,841 | $17,183 | +$342 |
| Arkansas | $16,579 | $16,928 | +$349 |
| Texas | $14,343 | $14,738 | +$395 |
| Kentucky | $16,502 | $16,898 | +$396 |
| New Mexico | $16,235 | $16,636 | +$401 |
| Oklahoma | $16,725 | $17,150 | +$425 |
| South Dakota | $14,343 | $14,806 | +$463 |
| Maryland | $17,067 | $17,533 | +$466 |
| Florida | $14,343 | $14,815 | +$472 |
| Idaho | $16,683 | $17,191 | +$508 |
| Pennsylvania | $16,340 | $16,869 | +$529 |
| Wisconsin | $16,424 | $16,960 | +$536 |
| Utah | $17,238 | $17,800 | +$562 |
| Montana | $16,658 | $17,229 | +$571 |
| Delaware | $17,458 | $18,095 | +$637 |
| North Dakota | $14,343 | $14,985 | +$642 |
| Vermont | $16,176 | $16,876 | +$700 |
| Maine | $17,056 | $17,760 | +$704 |
| North Carolina | $16,430 | $17,164 | +$734 |
| Illinois | $17,418 | $18,155 | +$737 |
| Ohio | $14,343 | $15,162 | +$819 |
| Connecticut | $16,346 | $17,246 | +$900 |
| Alaska | $14,381 | $15,297 | +$916 |
| Wyoming | $14,343 | $15,270 | +$927 |
| New York | $17,259 | $18,207 | +$948 |
| Minnesota | $17,243 | $18,258 | +$1,015 |
| Colorado | $16,497 | $17,809 | +$1,312 |
| Rhode Island | $16,166 | $17,569 | +$1,403 |
| Massachusetts | $17,376 | $18,877 | +$1,501 |
| California | $16,475 | $17,977 | +$1,502 |
| New Hampshire | $14,343 | $15,853 | +$1,510 |
| Nevada | $14,496 | $16,020 | +$1,524 |
| Tennessee | $14,343 | $15,945 | +$1,602 |
| Washington | $14,343 | $15,952 | +$1,609 |
| Oregon | $19,462 | $21,128 | +$1,666 |
| Hawaii | $21,005 | $22,939 | +$1,934 |
| New Jersey | $16,390 | $18,649 | +$2,259 |
Yearly federal and state tax and fees at $70,000 profit and $126,000 revenue, single filer, $1,800 a year of payroll and return costs.
Questions
Should a therapist form an S corp?
At $70,000 of profit and a $49,000 salary, an LLC taxed as an S corp costs less than a sole proprietorship in 2 of 51 states. The biggest saving is in District of Columbia ($764 a year), and in New Jersey it costs $2,259 more.
What salary should a therapist pay themselves?
The IRS expects pay in line with what the work would earn an employee. The median for employees in this job is $59,350 (BLS, May 2025). The figures here use that, capped at 70% of profit. More on reasonable salary.
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