Every new year brings new tax limits, rules, and exemptions, and the IRS changes coming in 2025 may affect your therapy practice.

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None of them are Earth-shattering, but some could affect your therapy practice’s financial strategy in 2025. Here are the highlights.

Your tax bracket may change

The limits on marginal tax rates are increasing. If your income last year was just high enough to put you in a particular tax bracket, this year you may drop to a lower bracket.

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Tracking your income with profit and loss statements (P&Ls) and strategically taking advantage of deductible expenses could set you up for a lower tax rate this year.

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You may no longer be eligible for an HSA

In order to contribute to a health savings account (HSA), you must be insured with a high deductible, low premium (HDLP) plan.

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The limits to those plans are changing for the 2025 tax year. In 2025, in order to contribute to an HSA, your HDLP must have a deductible no less than $2,850 but no higher than $4,300. Plus, your out-of-pocket limit must be no higher than $5,700.

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For family coverage in 2025, the minimum annual deductible is $5,700 and the maximum $8,550. The out-of-pocket expense limit is $10,500.

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These are minor changes, and unlikely to disqualify you from having an HSA. But double check the terms of your plan to be sure, and if you need a new HDLP, contact your insurer.

The qualified transportation fringe benefit has increased

If your therapy practice is an S corp and you cover your employees’ parking costs, you may now compensate them a little bit more. The monthly limit for 2025 is now $325.

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Fringe benefits sometimes serve as a payroll-tax-free way to compensate employees. Learn more about fringe benefits from our article on how to hire family members at your therapy practice.

The standard deduction may save you more money than before

The standard deduction for individual taxpayers has increased to $15,000 (or $30,000 if filing jointly). There are no changes to itemized deductions for 2025.

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Whether you itemize deductions or claim the standard deduction should depend on which method is likely to result in the biggest reduction in your tax burden. It’s a good idea to revisit these deductions each year to ensure you’re using the method that most benefits you.

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Earned income tax credits have increased if you have 3+ dependents

If you have three or more dependents, you can now claim a higher earned income tax credit. The credit is now worth $8,046.

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To learn more, check out the IRS article on who qualifies for the earned income tax credit.

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You can now contribute more to your 401(k)

The annual contribution limit for 401(k)s increases from $23,000 to $23,500 in 2025.

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Putting money in a 401(k) is a handy way of lowering your taxable income for the year while setting aside savings (and investments) for the future. For more info, check out our article on retirement plans for therapists.

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Feeling overwhelmed this tax season? Take the stress out of tax season with these 10 tips 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 their 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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