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What Do Therapists Need to Know About Taxes in Louisiana?

Louisiana offers licensed therapists a low-barrier entry into private practice — but there are still state and local tax requirements you need to watch. From sales tax on non-clinical services to franchise filings, here’s how to keep your practice compliant and tax-smart in 2025.


Who this guide is for

This guide is for:

  • Licensed Louisiana therapists (LPCs, LCSWs, LMFTs, psychologists, etc.)
  • Solo and group private practice owners
  • Providers working in person, online, or hybrid
  • Therapists looking to avoid penalties and reduce tax stress

Step 1: Pick the right structure for your practice

Your legal structure determines how you're taxed — and whether you’re personally liable.

Sole Proprietorship

  • No filing required unless using a DBA
  • No liability protection
  • Income reported on your personal tax return
  • Suitable for new or low-income practices

PLLC (Professional LLC)

  • Louisiana allows licensed professionals to form PLLCs
  • Provides liability protection
  • Taxed as a sole proprietorship by default
  • Can elect S Corp status later for tax savings
  • Must register with the Secretary of State and notify your licensing board

S Corporation

  • Helps reduce self-employment tax
  • Requires payroll, separate returns, and strict bookkeeping
  • Becomes cost-effective once you’re netting around $75K
  • Still subject to Louisiana’s state income tax and franchise tax

Professional Corporation (PC)

  • Allowed in Louisiana
  • Often taxed the same as an S Corp (if elected)
  • More admin-heavy — typically used by larger group practices

Step 2: Know your state tax obligations

State income tax

  • Louisiana has graduated income tax rates:
    • 1.85% on first $12,500
    • 3.5% on income $12,501–$50,000
    • 4.25% on income over $50,000 (2025)
  • Applies to all pass-through business income
  • File with LA Form IT-540

Franchise tax

  • Applies to PLLCs and S Corps
  • Minimum: $110/year
  • Due annually — file Form CIFT-620
  • Includes income and franchise taxes in one return

Local business licensing and sales tax

    • Cities like New Orleans or Baton Rouge may require local occupational licenses
  • Non-therapy services (e.g., coaching, consulting) may be subject to sales tax
  • Use Louisiana’s Parish E-File system to check requirements

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

Estimated taxes

  • Required if you’ll owe $1,000+ in federal or $1,000+ in Louisiana state tax
  • Due quarterly: April 15, June 15, Sept 15, Jan 15
  • Use LA Form R-540ES or pay online via LATAP

Self-employment tax

  • Applies to sole props and default PLLCs
  • 15.3% federal self-employment tax on net income
  • Avoidable on part of income with S Corp setup

Filing requirements

  • Sole prop: Schedule C + LA IT-540
  • PLLC: Franchise tax + individual tax return
  • S Corp: 1120-S + CIFT-620 + payroll filings + franchise tax

Step 4: Track and claim your deductions

Therapists in Louisiana can take advantage of a wide range of deductible business expenses.

Deductible expenses for therapists

  • CEUs, supervision, licensure renewals
  • Malpractice and liability insurance
  • EHR, scheduling, telehealth software
  • Rent or home office
  • Internet, phone, business cards, print materials
  • Advertising (Psychology Today, website, etc.)
  • Health insurance premiums (if self-employed)
  • Retirement contributions (SEP IRA, Solo 401k)

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

Once your practice is generating ~$75K+ in net income, it’s time to run the numbers.

  • Pay yourself a W-2 salary
  • Take the rest as distributions (not subject to SE tax)
  • Must handle payroll and file Form CIFT-620
  • Still pays LA franchise tax

Step 6: Common mistakes therapists make

  • Forgetting about the Louisiana franchise tax
  • Missing city or parish licensing requirements
  • Treating coaching or consulting income like tax-exempt therapy income
  • Skipping quarterly estimated payments
  • Waiting too long to elect S Corp
  • Failing to track expenses tied to CEUs or home office use

Step 7: Our recommendations by income level

Net Income Range

Suggested Action

Under $50K

Sole prop or PLLC; monitor local tax rules; track expenses

$50K–$100K

Consider S Corp; set up payroll; file franchise tax annually

Over $100K

Full S Corp setup; tax strategy planning; CPA involvement

Need help figuring this out?

We help Louisiana therapists reduce their tax burden, stay compliant with the state’s franchise tax, and avoid local licensing surprises.

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.