Key Takeaways
- The 2026 business mileage rate increased to 72.5¢ per mile, but documentation still matters more than the rate.
- Many core dental deductions didn’t change, but how the IRS looks at them has.
- Equipment, depreciation, retirement, and payroll-related deductions remain high-impact planning areas.
- Tracking systems (not memory) are essential as IRS scrutiny increases.
- Proactive planning beats retroactive deduction-hunting every time.
Mileage rates may get the headlines, but for dental practice owners, 2026 deductions are about much more than what you claim per mile. Between updated IRS limits, shifting enforcement priorities, and smarter ways to track expenses, the real opportunity for 2026 lies in planning, not scrambling.
Here’s a practical look at what’s new for 2026, which deductions remain strong, and how dentists can track and plan more effectively to reduce surprises and protect deductions.
Mileage Deductions: Higher Rate, Same Rules
For 2026, the IRS increased the standard business mileage rate to 72.5 cents per mile, up from 70 cents in 2025 (Notice 2026-10). This applies to gas, hybrid, and electric vehicles.
What hasn’t changed:
- Mileage must be business-related, not commuting
- Contemporaneous logs are still required
- You must choose between standard mileage or actual expenses (with limitations once chosen)
What’s new to note:
- The depreciation portion embedded in the mileage rate increased to 35 cents per mile, which impacts basis calculations later.
Planning tip:
If you use your vehicle for multiple locations, continuing education travel, or practice-related errands, mileage can add up, but only if tracked consistently. Apps beat handwritten logs every time.
Equipment & Technology: Still Powerful, Still Time-Sensitive
Thanks to OBBBA, 100% bonus depreciation is back for qualifying assets placed in service after January 19, 2025. Section 179 expensing limits also increased.
What didn’t change:
- Equipment must be placed in service, not just purchased
- Personal vs. business use still matters
What dentists often miss:
- Software, imaging systems, scanners, and certain technology upgrades may qualify
- Installation and training timelines can determine the tax year of the deduction
Planning tip:
Coordinate equipment purchases with us before signing contracts. December delivery without installation can push deductions into the wrong year.
Retirement Contributions: A Deduction That Multitasks
Retirement contributions remain one of the most effective ways for dentists to reduce taxable income while building long-term wealth. For many practice owners, these plans play a dual role: lowering current-year taxes while supporting long-term financial security.
What hasn’t changed:
- Solo and Safe Harbor 401(k)s remain popular and flexible options
- SEP IRAs continue to offer simplicity for certain practice structures
- Cash balance plans remain powerful tools for higher-income owners
What’s new to note:
- Contribution limits have gradually increased
- Catch-up contributions for high earners age 50 and older must now be made as Roth (after-tax) contributions
- The IRS is paying closer attention to retirement plan compliance and documentation
Planning tip:
If your practice income increased in 2025, or your retirement plan hasn’t been reviewed recently, your strategy may be outdated. Many plans now need to be updated to include a Roth option to allow catch-up contributions in 2026. Coordinating with your plan administrator early can help unlock larger deductions and avoid compliance issues later.
Payroll & Owner Compensation: A Hidden Deduction Lever
Payroll isn’t just an expense; it’s a tax strategy, especially for S-Corp owners.
What hasn’t changed:
- Owner compensation must still be “reasonable”
- Payroll taxes remain a major cost driver
What has changed:
- Increased IRS scrutiny of underpaid owner wages
- Greater emphasis on documentation supporting compensation decisions
Planning tip:
An annual compensation review helps balance payroll taxes and audit risk. This is especially important as profitability grows.
Professional Fees & Advisory Costs: Still Deductible, Still Valuable
Accounting, legal, consulting, and advisory fees remain deductible when they relate to business operations.
But here’s the shift:
- The IRS increasingly distinguishes between business advisory and personal services
- Sloppy categorization can weaken deductions
Planning tip:
Clearly label advisory expenses in your books. “Professional fees” is acceptable, but “miscellaneous” is not.
Office, Facility & Operating Expenses: No Big Changes, But More Scrutiny
Rent, utilities, supplies, PPE, maintenance, and repairs remain deductible, but the IRS expects consistency and substantiation.
What dentists often overlook:
- Small recurring expenses add up
- Inconsistent categorization raises red flags
Planning tip:
Use consistent expense categories and review them annually. Clean books support clean deductions.
Tracking Is the New Tax Strategy
The biggest “change” in 2026 isn’t a new deduction; it’s how deductions are reviewed.
- Digital records
- Consistent categorization
- Documentation created as expenses occur, not months later
Planning tip:
Strong bookkeeping isn’t just administrative, it’s defensive. Good records protect deductions you’re already entitled to.
Why This Matters for Dental Practices
Dental practices operate with:
- High overhead
- Significant equipment investments
- Complex payroll and ownership structures
That makes deduction planning a year-round exercise, not a tax-season scramble. The practices that plan early keep more of what they earn and sleep better doing it.
What You Should Do Now
As you move through 2026:
- Track mileage digitally and consistently
- Review equipment purchases and depreciation strategy
- Reassess retirement and payroll planning
- Clean up expense categorization
- Schedule a mid-year tax check-in
At Edwards & Associates, we help dental practice owners turn deductions into strategy. If you want to make the most of 2026 while staying compliant, we’re here to help.
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