- Delaware
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.
S Corp
- 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
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.
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