Physical therapy can play a crucial role in recovery after an injury, managing chronic pain, or improving mobility for people with disabilities. But when tax season arrives, many taxpayers wonder: can physical therapy costs be deducted on my tax return?
The short answer: yes, physical therapy often qualifies as a deductible medical expense, but there are specific rules you’ll need to follow.
Medical Expense Deduction Basics
The IRS allows taxpayers to deduct certain medical and dental expenses if they itemize deductions on Schedule A. However, these expenses must exceed 7.5% of your adjusted gross income (AGI) in order to be deductible.
For example, if your AGI is $60,000, only medical expenses above $4,500 can be deducted.
Since many taxpayers now take the standard deduction (rather than itemizing), medical expense deductions are less common than they used to be. But if you have significant out-of-pocket healthcare costs (including physical therapy) it may still be worth itemizing.
Is Physical Therapy Tax Deductible?
Yes—physical therapy is considered a qualifying medical expense under IRS guidelines. This includes:
- Sessions with a licensed physical therapist
- Medically necessary treatments ordered by a physician
- Certain supplies or equipment prescribed for rehabilitation
It does not include:
- Services or programs primarily for cosmetic purposes
- General fitness or wellness programs not tied to a diagnosed medical condition
- Weight loss or lifestyle programs, unless prescribed by a doctor to treat a specific disease
Deductibility for Individuals vs. Businesses
Individuals
If you’re paying out-of-pocket for physical therapy, you may be able to deduct it as a medical expense on your personal tax return—provided you itemize and exceed the 7.5% AGI threshold.
Business Owners
For certain professions, physical therapy may also qualify as a business expense. For instance, professional athletes, dancers, or performers who rely on physical health to earn income may be able to deduct physical therapy as an “ordinary and necessary” business expense.
This is a highly fact-specific situation, so it’s best to discuss with a CPA before taking the deduction.
Other Key Considerations
- Insurance Reimbursements: You can only deduct the portion of therapy costs not covered by insurance.
- Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA): If you pay for physical therapy using pre-tax FSA or HSA funds, you can’t deduct it again on your tax return.
- State Rules: Some states follow federal tax law, while others may have different rules for medical expense deductions.
- Documentation: Always keep receipts, invoices, and doctor’s notes recommending physical therapy. The IRS may require proof that the treatment was medically necessary.
The Bottom Line
Physical therapy expenses can be deductible, but only if they meet IRS requirements and you itemize deductions. For business owners in physically demanding fields, there may also be opportunities to deduct physical therapy as a business expense.
Since medical deductions can get tricky, especially when insurance reimbursements or business use is involved, it’s smart to review your specific situation with a tax professional.
If you’d like help determining whether your physical therapy expenses are deductible, contact our office. We’ll review your records, walk you through the IRS rules, and help ensure you’re not leaving money on the table.