Every business owner wants to believe that there are secret deductions they’re missing out on. They often seek out CPAs in the hopes that we hold the treasure map for finding them.
But the truth is, people are usually deducting more than what the IRS deems “ordinary and necessary,” not less. And that can get you into trouble down the line if your business is ever audited.
That’s why it is so important to hire a reputable CPA who can determine your true tax obligation and keep you in compliance — rather than telling you what you want to hear, or selling you on ill-advised (and sometimes illegal) loopholes.
Still, if you run a health and wellness business and own a studio, gym, clinic, or solo practice, there are probably some easily-missed expenses that belong on your tax return. More often than not, busy business owners just aren’t recording them correctly.
So, here’s a list of what actually qualifies as a deduction on your tax return, as well as how to record them so that you’re ready when tax time rolls around.
1. Mileage
Any kind of travel that you take for work is deductible, including driving to and from clients. For 2026, the standard rate is 72.5 cents per mile through June 30 and 76 cents from July 1 forward. Business owners tend to miss out on mileage deductions because it doesn’t usually run through a business bank account. To deduct this expense, all you need is a log of your total miles and your business miles.
Don’t feel like tracking it manually? No problem: Forbes has a great list of mileage tracking apps that business owners can use to automatically track their mileage throughout the year.
Common misconception: Driving from home to your place of work is commuting, which isn’t deductible. But driving from your place of work to a client is. Establish where your “main office” is first before calculating your mileage.
2. Cell Phone Bill
Your phone bill is probably in your personal name, paid from your personal account, which means the business never sees it and there’s nothing to deduct. To fix this, have your business reimburse you for the business-use portion of your phone bill. (It is up to you to determine what that number is, but be ready to explain how you got there should you be audited.) That reimbursement runs through the business account and is deductible.
One requirement: Any reimbursement to yourself or your team for expenses paid personally needs a written accountable plan behind it.
3. Your Workspace (Whether it’s a Brick-and-Mortar Location or a Home Office)
If you lease a studio, gym, or clinic
Your rent is deductible in full, as are the space’s utilities, such as Common Area Maintenance (CAM) charges, commercial insurance, and signage. It all runs through the business account, so it lands on the books.
Your build-out works differently. Mirrors, sprung floors, treatment room plumbing, a reception desk, HVAC for a hot studio — anything that improves the space rather than just keeps it running is written off gradually instead of all at once. The good news for 2026 is that the same 100% first-year rules that apply to equipment can apply here too, so a build-out finished this year may be fully deductible now. (Note: Minnesota treats it differently than the federal return does, which is exactly why a big build-out is worth a conversation before December rather than in April.)
Ongoing repairs are simpler. Patching drywall, repainting, fixing a faucet, servicing the HVAC you already have. Those are deducted in the year you pay for them.
Common misconception: A security deposit isn’t deductible when you pay it, because it’s an asset until it’s applied or forfeited.
If you work from home
Mobile massage therapists, doulas, in-home PTs, and solo practitioners running the business from home can deduct a home office when it’s the main office and the space is dedicated to the business. A full room is ideal, though part of a room can work (though unfortunately, the dining table doesn’t count).
There are two ways to calculate it:
1. Safe harbor: Deduct $5 per square foot, up to 300 square feet. This is an easier option that requires minimal recordkeeping.
2. Actual expenses: Calculate your office square footage as a percentage of the whole house, applied to mortgage interest, property taxes, utilities, trash, and similar. Phone and internet are figured separately.
4. Equipment Purchases
Equipment can include things like reformers, treatment tables, weight racks, sound systems, front-desk hardware, etc. Anything over $2,500 generally needs to be capitalized rather than expensed.
Expensed means the whole cost of the item is deducted from this year’s taxes. For example, if you buy $400 of towels, you can deduct $400 this year. Easy.
Capitalized means the item goes on your books as an asset instead, because it is an item you will use for years. A $4,000 Pilates reformer isn’t really a cost of this year, it’s a thing you now own and will use for a decade. So you deduct it gradually over its useful life. That gradual deduction is called depreciation.
Note: For 2026, both Section 179 and bonus depreciation sit at 100%, meaning you can deduct the full cost of equipment in year one. Section 179 applies to businesses spending less than $6,650,000 on qualifying property, which covers essentially every wellness business.
Minnesota business owners: Your federal and state pictures can look very different on the same purchase, which is worth a conversation with your CPA or financial advisor before buying a large piece of equipment.
5. Day-to-Day Operating Costs
Mats, towels, oils, sanitation supplies, music subscriptions, booking software, etc… If it’s used for the business and paid from a business account, it gets accounted for. These rarely get missed.
The exception is if you find yourself paying for business expenses out of a personal account. It takes extra work to find and put those back onto the books, so sometimes they just disappear. This is why we always advise that small business owners run all business spending through a business account exclusively.
Note: Anything bought for resale is inventory, which gets tracked separately.
A Few More:
- Conference travel. Deductible. But if a spouse comes along, their expenses are not deductible.
- Professional dues. Chambers, trade associations, professional societies. (If a portion of the dues goes to lobbying, that portion isn’t deductible.)
- Team events. Team building, holiday parties, and summer staff events are all fully deductible.
- Client gifts. Up to $25 per recipient per year.
- Logo apparel. Shirts with your logo that you wear at the studio or give away can be an advertising expense.
- Retirement contributions. A SEP is the most common option, and it can generally be funded up until you file, including extensions.
What Most CPAs Won’t Tell You
When a new wellness business owner comes to us, the more common problem isn’t missed deductions… It’s deductions that were taken and shouldn’t have been. Unwinding those requires amended returns, corrected W-2s, and a tax bill that wasn’t planned for.
Meals are the most complicated area that business owners like to deduct, and the rules keep changing. Meals with clients or prospects are deducted at 50%, as are meals you have while traveling for work. However, meals you provide to employees for your own convenience, like feeding the team through a late night, are no longer deductible in 2026.
The test for anything you’re unsure about: Would you have spent this money if the business didn’t exist? According to the IRS, an expense is deductible if it’s reasonable and necessary for business operations.
Clothing is only deductible if it’s a uniform provided by the employer. Regular clothes you bought to look professional don’t qualify.
And here is the flat-out “NOT DEDUCTIBLE” list:
- Personal appearance costs, even when your industry expects a certain look
- Commuting miles
- Country clubs, athletic clubs, and hotel clubs, even when you network there
- Your own gym membership
- Entertainment, season tickets, and golf outings
- Vacations, even if you bring a laptop and check email
“But What About My Vehicle?”
Let’s talk about the one that comes up constantly: your car.
Every year, a business owner tells me they’re going to put their car in the business name because someone told them it’s a write-off. Ninety percent of the time, my advice is: DON’T.
Here’s why:
If the business owns the car, the business deducts everything. Then any personal driving that you do from the business vehicle gets recorded as your income, which you have to pay taxes on later.
For example, if you drive the business vehicle 40% for personal reasons, then roughly 40% of that write-off you were hoping for turns back into taxable income.
Our recommendation is usually to take the mileage deduction instead. The mileage deduction only ever counts business miles, so there is nothing to pay taxes on later.
Also, when you sell a business-owned vehicle, the depreciation you took gets recaptured and taxed.
So, unless your business genuinely needs a vehicle all day to do the work (such as an electrician, plumber, or landscaper), you generally will want to keep the title in your personal name and take the mileage deduction. For 2026, that’s 72.5 cents per mile through June 30, and 76 cents from July 1 forward.
It’s simpler, cleaner, and far less likely to create a problem later.
These are examples, not a complete list, and several genuinely depend on details specific to your business.
Questions About Which Deductions You Can Take?
Wood CPA works with health and wellness businesses across Minnesota on bookkeeping, tax planning, and business advisory services.
The examples above are general information, not tax advice for your specific situation. If you want someone to look at your actual numbers, please schedule a free call with Wood CPA today.
