S-corp reasonable salary for therapists

National pay for therapists

These are annual wages BLS measured for Substance Abuse, Behavioral Disorder, and Mental Health Counselors (SOC 21-1018) in May 2025, across about 491,930 jobs.¹ The median hourly wage is $28.53.

BLS surveys employers about employees. It doesn’t cover the self-employed or owners of unincorporated firms. Wages count commissions and tips, not overtime or year-end bonuses, and annual figures assume a full-time year of 2,080 hours.⁴

Therapists pay by state

Pay varies a lot by state, so your state’s row is usually a better comparison than the national number. The highest state medians are Alaska ($80,770), Oregon ($74,590), New Mexico ($74,100). The lowest are Louisiana ($37,910), Mississippi ($46,990), Alabama ($47,310).² Each “Run it” link opens the calculator with your state picked.

BLS published a median for every state and DC. BLS withholds some estimates for quality or confidentiality reasons.⁴ Rural and metro pay can differ within a state.

Marriage and family therapists

Licensed MFTs are their own BLS occupation (21-1013). Nationally, the 25th percentile is $50,070, the median is $66,940 and the 75th percentile is $93,840.¹ BLS publishes state figures for 45 of the 51 (all 50 states plus DC). Elsewhere, use the national range.²

What the IRS looks at

An S corporation pays a reasonable salary to an owner who works in the business before taking distributions.³ The tax code doesn’t set a number.⁵ The IRS lists factors instead, and they make a good worksheet:³

• Training and experience. Your license, years in the field and specialties.
• Duties and responsibilities. Everything you do, including the admin and management work.
• Time and effort devoted to the business. Full-time, part-time or somewhere between.
• Dividend history. How distributions have compared to salary over the years.
• Payments to non-shareholder employees. What you pay people doing similar work.
• Timing and manner of paying bonuses to key people. Regular and planned, or whenever there’s cash.
• What comparable businesses pay for similar services. The BLS tables on this page are a starting point.
• Compensation agreements. A written plan for your own pay.
• The use of a formula to determine compensation. A method you can repeat and explain.

The IRS also points to where the money comes from: your own services, the work of employees who aren’t owners, and capital and equipment. Receipts from your own services belong in salary. Receipts from the other two can come out as distributions.³ Administrative work you do for the rest of the business counts as services too.³ And reasonable compensation never exceeds what you actually receive from the company.³

What it means for therapists

• The main table uses mental health counselors (BLS: substance abuse, behavioral disorder and mental health counselors). Marriage and family therapists have their own table below.
• Session hours drive receipts in a solo practice. If you see clients 25 hours a week and spend 10 on notes, billing and admin, that admin time still counts as services to your company.
• Group practices with associate clinicians can point to their sessions as receipts from non-shareholder employees.

Adjusting the number for your situation

• Hours. The BLS figures assume full time. If you work about 30 hours a week, scaling the median by 30/40 gives about $44,510. That’s a rough guide, not a rule.
• Two jobs in one. Many owners split their week between the work and running the business. If about 85% of your time is therapist work and the rest is management, blending the therapist median with the median for medical and health services managers ($123,860¹) gives about $69,030.
• Where the profit comes from. The more of the receipts come from your own services, the closer salary sits to profit. Receipts from employees and equipment can come out as distributions.³
• The ceiling. Reasonable compensation never exceeds what you actually receive.³ In a lean year, salary can come down with profit.
• Write it down. A one-page memo with the BLS row you used, your hours and your duties covers the factors the IRS lists. Update it each year.

2026 payroll tax on a therapist’s salary

Your salary carries Social Security and Medicare, both halves, plus a little FUTA. Distributions on top don’t carry employment taxes.³

Example. Say the business makes $90,000 in profit before your salary. As a sole proprietor, self-employment tax on that is about $12,717. As an S corp paying the median salary of $59,350, payroll tax is about $9,123, a difference of about $3,594. The salary and payroll tax are business expenses, and running payroll and an S-corp return has its own costs, so look at the full picture with your CPA.

2026 figures: Social Security 6.2% each for employer and employee on wages up to $184,500, Medicare 1.45% each with no cap⁶⁷, and FUTA at 6.0% on the first $7,000, which nets to 0.6% for employers who get the full 5.4% state credit.⁸ Self-employment tax is 15.3%, 12.4% for Social Security and 2.9% for Medicare⁹, figured here on 92.35% of net profit, the Schedule SE method. These leave out the 0.9% Additional Medicare Tax on high wages, state taxes and income tax.

Open the calculator for therapists →

Every business is a little different, so check with your CPA for your situation. Good CPAs love an owner who shows up with the homework done.

New to this? Start with how to pay yourself from an S corp, or see reasonable salary for other professions.

FAQ: S-corp salary for therapists