Do Therapists Need to Collect Sales Tax?

Short answer: No. Providers generally do not need to collect sales tax.

Sales tax is determined at the state or local level, not by the federal government, and the rules can vary widely. Some states have no sales tax at all, some states impose it on products but not services, and others require sales tax to be collected on both products and certain services.

The good news? As of this writing, no state requires sales tax to be collected on mental health services.

This is a relief for mental health professionals because collecting and remitting sales tax adds administrative complexity and increases expenses (e.g. higher professional fees). Therapists—like everyone else in the country—have to pay income tax on their earnings, so not having to worry about this additional tax is a welcome reprieve.

However, if you sell physical products—think books or relaxation aids—those may be subject to sales tax.

Sales tax must be collected from the buyer at the time of the sale and then remitted to the government, typically on a monthly or quarterly basis. Because the rules differ greatly by state and locality, it’s essential to consult with your CPA to ensure compliance if you sell products alongside your services.