- Oregon
What Do Therapists Need to Know About Taxes in Oregon?
Oregon doesn’t have a sales tax, but income taxes and local filing requirements can catch therapists off guard. Whether you’re just setting up your solo practice or optimizing an existing one, this guide walks you through the essential tax steps for therapists in Oregon.
Who this guide is for
This guide is for:
- Licensed Oregon therapists (LCSWs, LPCs, LMFTs, psychologists, etc.)
- Solo or group private practice owners
- Therapists working online, in-person, or both
- Anyone looking to avoid tax surprises and structure their business correctly
Step 1: Pick the right structure for your practice
Entity structure affects how much tax you pay and how protected you are legally.
Sole Proprietorship
- No formal filing unless using a business name
- Easy to start, but offers no liability protection
- All income is subject to federal and Oregon self-employment and income tax
PLLC (Professional Limited Liability Company)
- Oregon allows licensed professionals to form PLLCs
- Provides liability protection
- Default tax treatment: pass-through (like sole prop)
- Can elect S Corp status once income grows
- Must register with the Oregon Secretary of State and your licensing board
S Corporation
- Allows you to split income into salary + distributions
- Reduces self-employment tax
- Requires payroll, separate filings, and more admin
- Becomes worth it when you’re netting ~$75K+ per year
Professional Corporation (PC)
- Allowed in Oregon but not commonly used unless you’re running a large group practice
- Can elect S Corp treatment
- Requires bylaws, formal compliance, and more structure
Step 2: Know your state tax obligations
State income tax
- Oregon has progressive income tax rates, from 4.75% up to 9.9%
- Applies to all net income from your practice
- File on Oregon Form OR-40 (individual) or OR-20-S (S Corp)
Corporate Activity Tax (CAT)
- Applies if your gross receipts exceed $1 million
- Not likely to hit solo practitioners, but worth watching if you scale or run a group
Annual reports and fees
- Entities like PLLCs and PCs must file a business registry renewal each year
- Filing fee: $100
- Don’t skip it — failure to file can lead to administrative dissolution
Local business licenses
- Portland and other cities may require a city business license and local business tax
- Portland has a Business License Tax and Multnomah County Business Income Tax
- Always check with your city/county for local rules
Step 3: Pay taxes throughout the year — not just in April
Estimated taxes
- If you owe $1,000+ to the IRS or $500+ to Oregon, you need to make estimated payments
- Due quarterly: April 15, June 15, Sept 15, Jan 15
- Oregon estimated taxes go on Form OR-ESTIMATED
Self-employment tax
- 15.3% on net income for sole props and default PLLCs
- S Corp reduces this — only the salary is subject to SE tax
Filing requirements
- Sole prop: Schedule C + Oregon OR-40
- PLLC: File Oregon business renewal + personal income tax
- S Corp: IRS 1120-S + Oregon OR-20-S + payroll filings
Step 4: Track and claim your deductions
If you don’t track it, you can’t deduct it. Here’s what you should be writing off.
Deductible expenses for therapists
- Rent or eligible home office space
- HIPAA-compliant EHR and telehealth platforms
- CEUs, supervision, license renewal
- Malpractice and business insurance
- Marketing and website
- Internet, phone, and software
- Health insurance premiums (if self-employed)
- Contributions to Solo 401k or SEP IRA
Step 5: When it’s time to consider an S Corp
S Corp status can help reduce your tax burden when income grows.
- Pay yourself a W-2 salary
- Take remaining profit as distributions — not subject to SE tax
- You’ll still owe Oregon income tax on all earnings
- Worth the admin once net income exceeds $75K/year
Step 6: Common mistakes therapists make
- Not filing Oregon business registry renewal
- Missing Portland/Multnomah County business license and tax filings
- Electing S Corp but skipping payroll
- Forgetting quarterly estimated payments
- Not tracking CEU, license, or supervision costs
- Using one bank account for business and personal
Step 7: Our recommendations by income level
Net Income Range Suggested Action
Under $50K Sole prop or PLLC is fine; track everything; stay on top of local licensing
$50K–$100K Consider S Corp; outsource payroll; plan quarterly payments
Over $100K Full S Corp setup; max out retirement contributions; tighten tax planning
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 Oregon therapists avoid local tax headaches, build compliant S Corps, and make smarter decisions about how they pay themselves and structure their business.
Book a consult or email us at david@leichtercpa.com