Is it Worth it Financially to be a Travel Physical Therapist?

Pursuing Travel Physical Therapy can help you create a dream life in many ways: exploring the country, trying new settings, having more lifestyle flexibility, enjoying more freedom with your time, and earning higher income. But of course, being a Travel PT isn’t always sunshine and butterflies. There are certainly some downsides that come along with choosing to take contracts as a travel physical therapist. Finding short term housing, packing and moving often, being away from friends and family, and licensing hassles are all negative factors to consider. The key when trying to decide if Travel PT is right for you is weighing the pros and cons to determine if the pros for your specific situation make it worth it. The most common reason that physical therapists cite for choosing to travel, especially as new grads, is to make more money. That begs the question, do travel physical therapists really come out ahead financially when considering the additional costs involved?

Do Travel Therapists Really Make More Money?

This is actually a harder question to answer than you would expect and, again, varies based on the individual traveler’s circumstances. I was able to achieve financial independence in a very short amount of time as a travel therapist, but that isn’t the case for everyone. Let’s take a look at some of the factors that go into this to help determine if being a Travel PT makes financial sense for you.

While I’m focusing on Travel PTs, the information here also applies to prospective Travel Occupational Therapists (OT), Speech Language Pathologists (SLP), Physical Therapy Assistants (PTA), and Certified Occupational Therapy Assistants (COTA) as well since most of the factors are exactly the same.

What are the Variables that Impact Traveler Pay?

The main variables that impact how much you can realistically make as a Travel PT include: setting, location, which travel company you work with, if the contract is direct or through a third party vendor, and how desperate the facility is for a therapist. A travel physical therapist considering a SNF job with a lot of applicants in South Carolina through a Vendor Management System (VMS) with a big travel company is going to make significantly less than a Travel PT considering a home health job with no other applicants in California through a direct client with a small travel company. Let’s break down the factors above to illustrate this.

  • Setting: Home health contracts usually pay the most, on average, followed by outpatient, acute, schools, and SNF bringing up the rear. Of course this is only a generalization and the specific job will also be impacted by the other factors below.
  • Location: Some states have higher insurance reimbursement rates for therapy services than others, and some rural/critical access facilities receive additional government funding which allows them to pay higher. Facilities in locations with higher reimbursement rates can afford to pay travelers more money, so many really high paying jobs are on the west coast and in places like rural Alaska where reimbursement is better.
  • Travel Company: In general, smaller travel companies can pay travelers more due to lower overhead expenses, but this isn’t always the case. Every traveler wants to find the absolute highest paying travel therapy companies, but that’s not so easy since every travel company has its pros and cons including some intangible advantages that bigger companies often have over small companies. The amount that the travel company keeps on a contract varies but is often not as high as most new travelers think.
  • Direct vs. VMS Jobs: Direct client contracts will always pay better than jobs through a VMS with all things being equal, due to there not being an additional middle man involved taking a portion of the bill rate.
  • Supply/Demand: How in demand the contract is, meaning how many applicants they get, can massively change how much the facility is willing to pay for a travel physical therapist and how much negotiating power the therapist has. A facility in a desirable location that has 20 applicants for a travel position can get away with paying a lot less than a facility is a not so desirable location in desperate need of a traveler.

How Much do Travel Physical Therapists Actually Make?

On average, a travel physical therapist can expect to make between $1,700-$2,000/week after taxes for the vast majority of contracts, with where you land in that range being primarily driven by the variables above. There are some outlier contracts paying higher or lower, but those are usually less than 20% of the total available travel jobs and only in certain states (California mostly for over $2,000) and settings (home health for the highest paying jobs). We’ve seen Travel PT jobs listed for anywhere from $1,300/week to $3,300/week after taxes, so the range can be really big.

To compare travel pay, which is usually discussed in a weekly after-tax amount, vs. permanent job pay, which is usually discussed in an annual gross (pre-tax) salary, you’ll need to do some math and make sure you understand how to accurately make this comparison. To understand exactly how travel physical therapy pay works compared to that of a permanent physical therapy job, this guide will be very helpful.

But to give an example, an average travel therapist earning $1800/wk after taxes, working 48 weeks per year, would make the equivalent of a therapist at a permanent job making an annual gross salary of about $125,000/year.

How Much Could You Make at a Permanent PT Job?

Now that we know what you can likely expect to make as a travel physical therapist, we need to know what we’re comparing to in terms of the alternative at a perm position. Pay for permanent jobs can also vary a lot based on the location, your experience, the setting, and supply/demand. There are experienced PTs working home health jobs in Nevada making $120,000/year or more. There are also new grad PTs looking at outpatient jobs in North Carolina where they’re getting offers of $60,000/year or less.

Obviously these situations are relatively extreme, but you can easily see that the PT making twice as much wouldn’t think leaving a perm job to travel, just for the money, is as worth it financially as the PT making a salary on the low end. When trying to determine if traveling makes sense for you, it’s vital to do some research to determine how much you’d make back home at a permanent position vs. pursuing travel contracts (or compare to your current position if you’re already working).

How Much Higher Will Your Costs be as a Travel Physical Therapist?

When comparing finances between travel jobs and permanent positions, it’s really more about how much you can save than just how much you can make, since travelers have higher expenses to take into account. How much higher your expenses will be as a traveler will depend on where your permanent home is (your tax home) and what your expenses are at your tax home, plus how much short term housing costs in the area where you’re considering taking a travel contract.

For us personally, our tax home is in a pretty low cost of living area in Virginia, plus we “house hack” to reduce how much it costs us each month to maintain our home residence, but not every traveler is so lucky.

If, for example, you’re currently living in a high cost of living area with an expensive mortgage on a house that you don’t plan to sell, then your costs are going to be much higher maintaining that tax home than mine will be. Travel physical therapy won’t make as much sense for you financially since a portion of the extra money you make will go toward the housing expense back home. But, you have options and can consider improving your fixed expenses via house hacking and other strategies.

Short Term Housing Can be Expensive

Where you plan to travel and the cost of the short term housing in that area is important to consider as well. Usually pay is better in higher cost of living areas which can help to offset some of the costs. However, that’s certainly not always the case, especially in more desirable areas like Denver, Austin, San Diego, and Seattle. Often jobs in those areas are very sought after, which means they don’t pay very well, and then on top of that the short term housing prices can be extremely high, making it not a great financial choice. (In these cases, therapists are often choosing these areas for the experience even though they may not come out ahead financially).

Personally, most of our short term housing costs at our Travel PT locations have been in the $700-$1,000/month range, but we typically travel to lower cost of living areas. We know travelers that have taken jobs in cities like San Francisco where one bedroom furnished apartments rent for well over $2,500+ per month for short term leases. Our costs were higher when we took contracts in Hawaii ($1800/mo) and Alaska ($2400/mo), but again these contracts were more about the experience for us than making and saving the most.

There are other expenses that are higher as a traveler as well, but to a lesser degree than housing. As a traveler you can expect to spend more money on gas when driving from assignment to assignment and likely more on food since cooking at home isn’t always as easy depending on the kitchen set up at the housing your choose while on assignment. You also need to take into account wear and tear on your car from the extra mileage.

How Much Time Will You Take off Between PT Contracts?

As a traveler you do receive benefits through the travel companies that you work with while on assignment, but those benefits don’t include vacation time or PTO. That means that any time that you take off between travel physical therapy assignments will directly reduce how much you’ll earn over the course of a year. Most travel PTs take at least 4 weeks off per year (on average, one week between each contract) but it’s not uncommon for travelers to take several weeks off between jobs to spend time at home, travel for leisure within the US, or travel internationally.

In fact, the flexibility to take as much time off as we want is the reason that Whitney and I have been traveling for over 7 years now. Although all travelers enjoy this perk, it comes with the downside of reduced income over the course of a year. So depending on how much time you plan to take off between contracts can make a big difference in how much you make annually and how much you come out ahead financially as a travel physical therapist.

It’s Not Always About the Finances

As you can see, there are many factors that will determine whether travel physical therapy will be worth it for you financially. All of these factors are unique to you, so you have to judge for yourself based on your own circumstances.

For Whitney and I, working as Travel PTs put us in an amazing financial position very quickly, and I was actually able to semi-retire after only a little over 3 years working full time as a travel physical therapist. We actually encourage many PTs, especially new grads, to consider doing something similar with their own version of semi-retirement.

With all of that being said, there are other advantages to travel physical therapy that go beyond the finances. Traveling is a great way to try out different settings, explore new areas of the country, make new friends, check items off of your bucket list, and learn from a variety of different clinicians. Initially we thought our only reason for traveling was to save money and pay off student debt, but, to our surprise, the best aspects of Travel PT ended up being the flexibility and adventures that we were able to have both while on contract and between contracts. After 7 years as travelers, we’ve been to all 50 states, visited almost all of the US National Parks, and traveled to over 35 countries internationally while taking time off between contracts. Honestly, those experiences have been priceless and would have been worth it even if we didn’t come out ahead financially compared to working permanent PT jobs.

Is Travel Therapy Right for You?

If you are trying to decide if travel physical therapy is right for you, our free Travel Therapy 101 series is a great place to start learning about the basics. We’ve mentored thousands of new Travel PTs over the years, with one of the most important services we provide being helping travelers get connected with great recruiters and travel companies. If you’d like recommendations based on your personal situation and preferences, fill out our recruiter recommendation form to get connected.

If you’re ready to dive deeper into travel therapy and get a step-by-step guide on not only getting started but being financially successful as a travel physical therapist, our comprehensive travel therapy course is the perfect thing for you. If you have an questions about Travel PT that we haven’t covered in our articles and videos, feel free to contact us! Best of luck on your travel physical therapy journey!

Additional Resources

Jared Casazza
Written by Jared Casazza, PT, DPT – Jared has been a traveling physical therapist since 2015 and is an expert in the travel therapy industry

Which States Have the Best Tax Rates for Travel Therapists? State Tax Rates Ranked

Understanding which states have the best tax rates for travel therapists can be very important depending on the situation. The majority of new travel therapists choose to travel to get ahead financially. This is certainly true for most new grad travelers who we mentor. On average, a travel therapist can expect to make 1.5-2x more on a yearly basis than they would at a permanent job. If you’re unfamiliar with how travel therapy pay works, our guide to travel therapy pay will be helpful. The higher earnings can be used in a variety of ways including: paying down student debt, taking extra time off throughout the year with the flexibility travel contracts provide, or even choosing to semi-retire.

Tax Advantages of Travel Therapy

It’s no secret that the tax advantages that come along with being a travel therapist are a huge factor in those higher earnings. A travel therapist traveling with a tax home, is eligible for tax free stipends for housing, meals, and incidentals. These tax frees stipends can often be $1,000/week or more which means a lot more money in the pocket of the travel therapist throughout the course of a year. Outside of understanding the tax home rules and ensuring compliance there, most travel therapists are lost when it comes to taxes.

That was certainly the case for me when I started as a new grad travel physical therapist in 2015. At that time, I’d never filed my own taxes and didn’t understand federal taxes, much less how state taxes would work with being employed in multiple states throughout the year as a traveler. Filing multiple state returns correctly is intimidating but isn’t nearly as difficult as you’d think once you have an understanding of taxes in general.

In this article, I hope to shed some light on federal and state taxes and use that to rank the states in terms of tax rates for travel therapists.

Federal Versus State Tax Rates

The first thing to understand is that you pay both federal income tax and state income tax on all of your taxable earnings. You also pay FICA taxes on earnings, which go toward your future Medicare and Social Security benefits. This may sound obvious and basic to some of you, but I’ve talked to many therapists that are confused when they see federal taxes and FICA taxes withheld on their paychecks while working in a 0% income tax state. You see, states can determine their own income tax rates, but this does nothing to change the tax rates that the federal government implements. You’re the on the hook for those no matter what state you work in or which state your tax home is in.

FICA taxes owed are equal to 7.65% of your taxable income, and your federal tax rate will depend on your income level after any applicable deductions including 401k contributions. The reason that federal tax rates vary and FICA taxes don’t is because federal, and most state, taxes are marginal. Marginal tax rates are more beneficial for lower income earners. In fact, this is why it’s actually possible to pay $0 in federal taxes as a travel therapist with some good advanced planning since we can actually have quite a low taxable income and adjusted gross income (AGI).

Fixed, Marginal, and Effective Tax Rates

Fixed Tax Rates

A good example of a fixed tax rate is the FICA taxes that you pay. Whether your taxable income is $10,000/year or $100,000/year, you’re still going to be paying 7.65% of that income toward FICA taxes. The rate you pay doesn’t change with your income level (up to certain income caps).

Marginal Tax Rates

Marginal tax rates on the other hand change (increase) as taxable income increases. Someone earning only $10,000/year will owe significantly less in income taxes as a percentage of their total income than someone earning $100,000/year. How much more the higher earning person will owe depends on how quickly the marginal income levels and tax rates increase in the tax code. The reason for this is that your marginal tax rate tells you how much you owe on each additional dollar of income based on the tax bracket you’re in. Not how much your owe on your entire income.

Effective Tax Rates

Your effective tax rate is how much you actually owe in taxes relative to your total taxable income. If you owe $400 on $10,000 worth of taxable income, then your effective tax rate is 4% on that $10,000 of income. This may sound the same as your marginal tax rate at first, but it isn’t. This is confusing for many people. The best way to illustrate the difference is with an example.

Marginal Tax Example

Let’s say you earn $20,000/year and your state tax rates look like this for up to the $20,000 level:

  • 1% owed on income from $0 – $10,000
  • 3% owed on income from $10,001 – $15,000
  • 5% owed on income from $15,001 – $100,000
  • 8% owed on income $100,000 or higher

In this example, with your $20,000/year income, you’d be in the 5% marginal tax bracket, but your effective tax rate would be less than that. The reason for that is that you only owe 1% on the first $10,000 that you earned, 3% on the next $5,000, and 5% on the last $5,000. To determine the effect tax rate in this example, we can do it with this formula: ((10,000*.01)+(5,000*.03)+(5,000*.05))/20,000. Simplified: (100+150+250)/20,000 = 0.025 = 2.5%

For this example, your effective tax rate would be 2.5%, even though your income level puts you in you in the 5% marginal tax bracket. The most common misconception with marginal tax rates is that you pay that marginal tax rate on all of your income, when in fact you only pay the highest marginal rate on the portion of your income that carries over into that tax bracket.

You’ve probably heard people say something like working overtime often isn’t worth it because it puts you in a higher tax bracket and you earn less. This is a misunderstanding of the tax code, because in a marginal tax system you’d never pay higher taxes on prior earnings by earning additional money. As you can see from the above example, you only actually pay the higher marginal tax rate on dollars earned over the prior bracket.

Why Do Marginal Tax Rates Matter?

The reason it’s vital to understand marginal tax rates when determining which states have the lowest taxes for travel therapists is because often states that are thought to have very high income taxes, have very reasonable tax rates when it comes to lower income levels. The most glaring example of this is California. If you ask any travel therapist what state they think they’ll pay the highest tax rate in, the vast majority of the time California will be the answer given. In reality for a normal travel therapist, California isn’t even in the top half of highest tax states!

What matters to travel therapists is the total amount paid in taxes on their income (effective tax rate) and the way the marginal tax rates for each state are structured determine this. Since some travel therapists choose which states to work in based on tax rates, understanding the true tax rate for you is vital.

State Income Tax Rates Ranked

Since taxes owed under a marginal rate tax code vary depending on taxable income level, in order to rank the states we need to try to determine the average taxable income for a travel therapist. Most Travel PT’s, Travel OT’s and Travel SLP’s have a taxable hourly pay rate between $20-$25/hour and work full time between 42-48 weeks per year. The hourly rate for Travel PTA’s and Travel COTA’s would be lower, maybe more in the $15-20/hour range.

For this example, we’ll assume that a travel therapist works 40 hours per week for 46 weeks per year, earning a taxable hourly rate of $25/hour. $25/hour * 40 hours/week * 46 weeks/year = $46,000/year in taxable income.

Before we move on in discussing the state tax rates, I want to further hammer home this point because it’s extremely important to understand. While travel therapists do earn higher income and can expect to take home well over $100k per year in most cases, what we need to look at in determining state taxes, is only the taxable portion of our pay. Since for most travel therapists who meet the tax home rules, our stipends are untaxed, you do not consider this portion of your income when determining taxes. Taxes are only based on your hourly, taxable income. So again, in this example, let’s assume that the average taxable income for a travel therapist is $46,000/year.

Below are the states (plus Washington D.C.) ranked based on effective tax rate* from lowest to highest for a travel therapist earning $46,000/year in taxable income.

*Based on state tax data for 2021 tax brackets (most recent tax filing year)

  1. Alaska- 0% (Marginal- 0%)
  2. Florida- 0% (Marginal- 0%)
  3. Nevada- 0% (Marginal- 0%)
  4. New Hampshire- 0% (Marginal- 0%)
  5. South Dakota- 0% (Marginal- 0%)
  6. Tennessee- 0% (Marginal- 0%)
  7. Texas- 0% (Marginal- 0%)
  8. Washington- 0% (Marginal- 0%)
  9. Wyoming- 0% (Marginal- 0%)
  10. North Dakota- 0.8% (Marginal- 1.1%)
  11. Ohio- 1.12% (Marginal- 2.77%)
  12. Arizona- 1.98% (Marginal- 3.34%)
  13. New Jersey- 2.16% (Marginal- 5.53%)
  14. Vermont- 2.58% (Marginal- 3.35%)
  15. Louisiana- 2.65% (Marginal- 4%)
  16. Rhode Island- 2.67% (Marginal- 3.75%)
  17. California- 2.68% (Marginal- 6%)
  18. New Mexico- 2.96% (Marginal- 4.9%)
  19. Pennsylvania- 3.07% (Marginal- 3.07%)
  20. Missouri- 3.07% (Marginal- 5.4%)
  21. Indiana- 3.16% (Marginal- 3.23%)
  22. Colorado- 3.27% (Marginal- 4.5%)
  23. Arkansas- 3.54% (Marginal- 5.9%)
  24. Mississippi- 3.58% (Marginal- 5%)
  25. Nebraska- 3.75% (Marginal- 6.84%)
  26. Maryland- 3.77% (Marginal- 4.75%)
  27. Iowa- 3.77% (Marginal- 6.25%)
  28. Michigan- 3.80% (Marginal- 4.25%)
  29. Maine- 3.81% (Marginal- 6.75%)
  30. Oklahoma- 3.79% (Marginal- 5%)
  31. Wisconsin- 3.82% (Marginal- 5.3%)
  32. Washington D.C.- 3.93% (Marginal- 6%)
  33. South Carolina- 3.94% (Marginal- 7%)
  34. West Virginia- 3.95% (Marginal- 6%)
  35. Kansas- 3.99% (Marginal- 5.7%)
  36. North Carolina- 4.02% (Marginal- 5.25%)
  37. Montana- 4.03% (Marginal- 6.9%)
  38. Minnesota- 4.09% (Marginal- 6.8%)
  39. Alabama- 4.12% (Marginal- 5%)
  40. Idaho- 4.2% (Marginal- 6.5%)
  41. Delaware- 4.3% (Marginal- 5.55%)
  42. New York- 4.42% (Marginal- 5.97%)
  43. Georgia- 4.46% (Marginal- 5.75%)
  44. Virginia- 4.51% (Marginal- 5.75%)
  45. Massachusetts- 4.52% (Marginal- 5%)
  46. Connecticut- 4.57% (Marginal- 5%)
  47. Illinois- 4.69% (Marginal- 4.95%)
  48. Kentucky- 4.71% (Marginal- 5%)
  49. Utah- 4.81% (Marginal- 4.95%)
  50. Hawaii- 6.07% (Marginal- 7.9%)
  51. Oregon- 7.66% (Marginal- 8.75%)

Tax Rate Surprises for Travel Therapists

Most people only look at the highest marginal tax bracket when considering the affordability of a state’s income taxes. In reality, when considering which states have the best tax rates for travel therapists, the top marginal tax bracket doesn’t mean anything. It took me a while to realize and really understand this. Had you told me a few years ago that I paid more in state taxes in my home state of Virginia than I would California as a travel therapist, I would have thought you were crazy… but it’s true.

Despite Virginia having a top state tax rate of 5.75% and California having a top state tax rate of 12.3%, an average travel therapist will pay an effective tax rate of only 2.68% in California versus 4.51% in Virginia. Almost double! That’s because the state marginal tax rate for California never exceeds 8% until income levels over $50,000/year of taxable income (accounting for the standard deduction), and the rates increase very gradually. Whereas in Virginia, anyone earning over $22,000/year (accounting for the standard deduction) is in the highest marginal tax bracket of 5.75%.

Tax Home Impact

Another important thing to consider when thinking about state tax rates as a travel therapist is your home state tax rate. The reason is because in most cases you end up paying the higher rate between the state you work in and your tax home state, which can negate purposely trying to work in favorable income tax states. We discuss this more in depth in this video. For example, if your home state is Oregon and you purposely take a full year’s worth of contracts in Florida due to the 0% income tax rate in Florida, you’ll be disappointed at tax time when you end up having to pay state taxes on your Florida earnings to your home state of Oregon.

On the other hand, if your home state is Texas, then it would make a lot of sense to try to take contracts in another 0% tax state to avoid paying state income taxes on your taxable income.

How Much Do State Tax Rates Really Matter?

Of course, state tax rates have a relatively small impact on how much you’ll earn over time as a travel therapist, but it isn’t trivial by any means and can be pretty large in some instances. If you take the highest tax state and the lowest tax state above, the difference in taxes owed is about $3,500/year for the average travel therapist. For most travelers that is equal to 1.5-2 weeks of pay, which is significant. This may be most applicable to a traveler whose tax home is a 0% income tax state, in making decisions to try to work in other 0% income tax states, or lower tax states, instead of working in the highest tax state, Oregon.

Those are the extremes though, so realistically choosing a low tax state over a high tax state will probably amount to $1,000-$2,000/year on average depending on the traveler’s tax home state. Choosing to work with a high paying travel company based on your situation or a great recruiter that can find you high paying contracts will often have a much bigger impact than state taxes. So, for you, it may not be worth stressing about avoiding high tax states.

Which state in the rankings above is the most surprising to you? Do you consider the state tax rate when considering whether to take a contract? Let me know in the comments below!

Jared Casazza
Written by Jared Casazza, PT, DPT – Jared has been a traveling physical therapist since 2015 and is passionate about personal finance topics.

Disclaimer: Jared is not a tax expert or financial advisor. All information provided here is based on Jared’s understanding of the tax code and was gathered using public tax information. If you have questions about your personal taxes, you should consult a CPA or other tax expert.

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