What Do Therapists Need to Know About Taxes in Delaware?

Delaware has no sales tax and a modest income tax structure, but the state is known for its strict business compliance rules. Whether you're a solo therapist or building a group, this guide helps you navigate taxes, entity setup, and required filings in Delaware.

Who this guide is for

This guide is for:

Licensed Delaware therapists (LPCMHs, LCSWs, LMFTs, psychologists, etc.)
Clinicians in solo or group practice
Providers delivering in-person or telehealth services
Anyone looking to build a compliant, tax-smart private practice

Step 1: Pick the right structure for your practice

The structure you choose affects your taxes, liability, and paperwork.

Sole Proprietorship

No registration required unless operating under a trade name
Easy setup, but no legal protection
Profits are taxed on your federal and Delaware personal return

PLLC (Professional LLC)

Delaware allows licensed professionals to form PLLCs
Offers personal liability protection
Default tax treatment: pass-through
Can elect S Corp status once income grows
Must register with the Division of Corporations

S Corporation

Helps reduce self-employment tax by splitting income
Requires payroll, corporate filings, and clean bookkeeping
Often makes sense once net income exceeds ~$75K
Still pays Delaware personal income tax

Professional Corporation (PC)

Permitted in Delaware
Can elect S Corp tax treatment
More paperwork and corporate governance
Useful for group practices

Step 2: Know your state tax obligations

State income tax

Delaware has graduated personal income tax rates from 2.2% to 6.6%

Applies to all pass-through business income
File via Form PIT-RES (resident) or PIT-NON (non-resident)

Gross Receipts Tax (GRT)

Delaware imposes a Gross Receipts Tax on the total revenue, not profits
Most therapy services fall under “professional services” category
Rates vary by category (often ~0.3983% or higher)
No deductions — tax is based on gross revenue
Must file monthly or quarterly depending on revenue

Annual report

Required for all LLCs and corporations
$300 annual fee for LLCs
Due June 1 each year

Business license

Delaware requires a state-level business license from the Division of Revenue

Renewed annually — fees depend on business type
Local licenses may also apply in certain cities or counties

Step 3: Pay taxes throughout the year — not just in April

Estimated taxes

Required if you expect to owe $1,000+ to the IRS or $400+ to Delaware
Due quarterly: April 15, June 15, Sept 15, Jan 15
Use Form PIT-EST for state estimates

Self-employment tax

Applies to sole props and default PLLCs
15.3% federal SE tax on net income
S Corp reduces this by shifting some income to distributions

Filing requirements

Sole prop: Schedule C + DE PIT
PLLC: Annual report + DE income tax + GRT + license renewal
S Corp: 1120-S + DE informational return + payroll + license + GRT

Step 4: Track and claim your deductions

Delaware taxes gross receipts — but tracking deductions still saves you on federal and state income taxes.

Deductible expenses for therapists

HIPAA-compliant EHR, scheduling, and billing tools
License renewals, CEUs, supervision
Malpractice and business insurance
Marketing, website, directories
Internet, phone, office supplies
Retirement plan contributions
Self-employed health insurance

Step 5: When it’s time to consider an S Corp

The S Corp structure can lead to real tax savings.

Pay yourself a W-2 salary
Take remaining profit as distributions
Still file and pay Delaware GRT on gross revenue
Must run payroll and file corporate returns
Best when net income hits $75K or more

Step 6: Common mistakes therapists make

Forgetting to register for the Gross Receipts Tax

Not filing Delaware's $300 annual report on time
Assuming there's no business license requirement
Not tracking business expenses throughout the year
Skipping estimated tax payments
Not complying with payroll and S Corp requirements

Step 7: Our recommendations by income level

Net Income Range	Suggested Action
Under $50K	Sole prop or PLLC is fine; file GRT; get state business license
$50K–$100K	Consider S Corp; stay on top of GRT; run payroll correctly
Over $100K	Full S Corp structure; automate payroll; CPA involvement highly recommended

Need help figuring this out?

We help Delaware therapists stay compliant with gross receipts tax, reduce their federal tax burden, and simplify practice finances.

Book a consult or email us at david@leichtercpa.com

Disclaimer: This guide is for informational purposes only and does not constitute legal, tax, or financial advice. While we make every effort to keep the content accurate and up to date, state laws and regulations can change without notice. You should consult a licensed professional in your state before making any decisions based on this information. Leichter Accounting Services is not liable for any errors or omissions, or for any actions taken based on the contents of this guide.