Quick Answer
Yes, freelancers can deduct therapy and mental health services as medical expenses if they exceed 7.5% of adjusted gross income. Self-employed individuals earning $60,000 would need over $4,500 in total medical expenses to start deducting, but can also use HSA funds tax-free for mental health care.
Best Answer
Priya Sharma, CPA
Best for self-employed individuals with significant medical expenses or HSA eligibility
How mental health deductions work for freelancers
Yes, therapy and mental health services are fully deductible medical expenses for freelancers — but only if your total medical expenses exceed 7.5% of your adjusted gross income (AGI). According to IRS Publication 502, mental health care qualifies as a deductible medical expense, including therapy sessions, psychiatric consultations, and prescription medications for mental health conditions.
Example: $60,000 freelancer with therapy expenses
Let's say you earned $60,000 as a freelancer and paid $6,000 for therapy sessions throughout the year:
You'd need to itemize deductions instead of taking the standard deduction ($15,000 in 2026), so this only makes sense if your total itemized deductions exceed $15,000.
HSA: The better option for mental health expenses
If you're self-employed, contributing to a Health Savings Account (HSA) provides a much better tax benefit. HSA contributions are deductible above-the-line (reducing your AGI), and withdrawals for qualified medical expenses — including therapy — are completely tax-free.
2026 HSA limits:
Using our $6,000 therapy example with an HSA:
Qualifying mental health expenses
According to IRS Publication 502, these mental health expenses are fully deductible:
Not deductible:
What you should do
1. Track all mental health expenses throughout the year
2. Consider opening an HSA if you're self-employed with a qualifying high-deductible health plan
3. Calculate both scenarios — medical deduction vs. HSA — to see which saves more
4. Keep detailed records of all therapy sessions, prescriptions, and related travel
[Use our deduction finder tool to identify all your qualifying medical expenses →](deduction-finder)
Key takeaway: HSAs provide better tax benefits than medical expense deductions for most freelancers. A $4,300 HSA contribution saves $946 in taxes (22% bracket) while providing tax-free withdrawals for therapy.
Key Takeaway: HSAs provide better tax benefits than medical expense deductions for most freelancers, saving $946 vs. $330 on the same therapy expenses.
Tax benefits comparison for $6,000 in therapy expenses across different income levels
| Income Level | 7.5% Threshold | Deductible Amount | Tax Savings (22% bracket) |
|---|---|---|---|
| $40,000 | $3,000 | $3,000 | $660 |
| $60,000 | $4,500 | $1,500 | $330 |
| $80,000 | $6,000 | $0 | $0 |
More Perspectives
James Okafor, EA
Best for first-year freelancers learning about medical expense deductions
Yes, but you probably won't qualify yet
As a new freelancer, therapy and mental health services are deductible medical expenses, but you likely won't meet the 7.5% AGI threshold in your first year. Most new freelancers earn less and have lower total medical expenses.
Example: First-year freelancer earning $30,000
If you earned $30,000 in your first year and paid $2,400 for therapy:
You'd also need other itemized deductions totaling over $15,000 (the 2026 standard deduction) to make itemizing worthwhile.
Focus on HSAs instead
If you're buying your own health insurance, look for a high-deductible health plan that qualifies for an HSA. Even contributing $1,000 to an HSA saves you $120-220 in taxes (depending on your bracket) and creates tax-free money for future therapy sessions.
What to track now
Even if you can't deduct therapy expenses this year, start tracking everything:
As your freelance income grows, you'll be more likely to exceed the 7.5% threshold and benefit from medical deductions.
Key takeaway: New freelancers rarely exceed the 7.5% AGI threshold for medical deductions, but HSA contributions provide immediate tax benefits for mental health expenses.
Key Takeaway: New freelancers rarely exceed the 7.5% AGI threshold for medical deductions, but should track expenses and consider HSAs for immediate tax benefits.
Priya Sharma, CPA
Best for people with both W-2 and freelance income who want to maximize medical deductions
Your total income affects the threshold
As a side hustler, your AGI includes both W-2 and 1099 income, which makes the 7.5% threshold higher. However, you can deduct therapy expenses against your entire income, not just freelance earnings.
Example: $80,000 total income ($60K W-2 + $20K freelance)
If you paid $4,000 for therapy and have $2,000 in other medical expenses:
You'd need over $6,000 in medical expenses to start deducting.
Employer health benefits complicate HSAs
If your W-2 employer offers health insurance, you might not qualify for an HSA. You can only contribute to an HSA if you're not covered by an employer's health plan (with limited exceptions).
State tax considerations
Some states don't conform to federal medical expense rules. For example, California doesn't allow the medical expense deduction, so therapy costs aren't deductible on your state return even if they qualify federally.
Strategies for side hustlers
1. Combine all medical expenses — including family members' costs
2. Time medical procedures to bunch expenses in one tax year
3. Consider employer FSA if available (up to $3,200 in 2026)
4. Track mileage to all medical appointments
Key takeaway: Side hustlers face higher AGI thresholds for medical deductions but can often use employer FSAs or time medical expenses strategically to maximize benefits.
Key Takeaway: Side hustlers face higher AGI thresholds for medical deductions but can strategically time expenses or use employer FSAs to maximize tax benefits.
Sources
- IRS Publication 502 — Medical and Dental Expenses
Reviewed by Priya Sharma, CPA on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.