Home health agency owner taxes and deductions

Caregivers are employees, and payroll with the employer taxes on it is deductible in full. The overtime position is genuinely unsettled right now: a 2013 rule stopped agencies claiming the companionship and live-in exemptions and was upheld in court, but the Department of Labor stopped enforcing it in 2025 and has proposed rescinding it. The rule is still law, so private claims and state wage laws still apply, do not read non-enforcement as permission.

Background checks, training hours and state licensing are all deductible. Caregiver mileage between clients is deductible to whoever bears it, reimburse it and the agency deducts it, do not and the caregiver may claim it themselves. Scheduling and electronic visit verification software are ordinary subscriptions and are usually mandatory for Medicaid billing.

The deductions with a rule attached

These are the lines where the answer is not simply "keep the receipt"each has a cap, a percentage or a test that decides how much of the spend you actually get:

Mileage or travel: Business driving counts; commuting does not. The rate changed mid-year: 72.5 cents a mile to June 30, 2026 and 76 cents from July 1, so a full year has to be split at that date rather than multiplied by one figure. A hundred business miles a week across the whole year is about $3,861 off your profit. You cannot use the standard rate at all on a vehicle you have already claimed MACRS depreciation, Section 179 or bonus depreciation on.

The rest of the home health agency owner deduction list

Ordinary and necessary business expenses, deductible in full in the year you pay them, provided they are genuinely for the business:

Staff wages
Your share of payroll taxes
Liability insurance
Workers’ compensation insurance
Scheduling software
Licensing fees state
Background check fees
Staff training

Worth knowing

Caregiver payroll is nearly the whole cost base, and home care has overtime rules of its own that decide what that payroll actually costs.

That is what is specific to this trade. The larger deductions are the universal ones, see the full checklist.

What each deduction is worth to you

On $100,000 of profit with no state income tax, $1,000 deducted saves $305, 30.5%, because it comes off self-employment tax and income tax together:

Net profit	Saved per $1,000 deducted	Effective
$40,000	$231	23.1%
$100,000	$305	30.5%
$200,000	$297	29.7%

The last row is worth less than the one above it, and that is not a mistake: past the Social Security wage base the self-employment part of the saving drops from 15.3% to 2.9%, and the higher income-tax bracket does not quite make up the difference. A deduction is worth most in the middle.

Add a state income tax and every row rises. The 1099 calculator applies that layer.

Where this comes from

The rules on this page that are specific rather than general are cited below. Follow a link to read the provision itself rather than taking our word for it:

The rule barring agencies from the companionship exemption is in force but unenforced pending a proposed rescission29 CFR 552.109; DOL FAB 2025-4; 90 FR 28976medium confidence

What these words mean

Section 179: A rule letting you deduct the whole cost of equipment in the year you start using it, instead of spreading it over the years you own it.
Depreciation: Spreading the cost of something long-lasting, a vehicle, a camera, a tractor, across the years you use it, rather than deducting it all at once.
MACRS: The standard federal timetable for depreciation, the schedule that decides how much of an asset’s cost you deduct in each year of its life.

General information about how these deductions work, not tax advice. Whether a particular expense is deductible for you depends on facts this page does not have, check with a tax professional before claiming anything listed here.