Since President Donald Trump’s re-election, several tax policy changes have been proposed that could significantly impact dental professionals both personally and in their practices. Since it is always important to stay informed about developments that can impact our clients, we wanted to share what we know now since it could impact the decisions you make this year and going forward. 

Extension of Tax Cuts and Jobs Act (TCJA) Provisions

The administration aims to extend key provisions of the TCJA, many of which are set to expire at the end of 2025. For dental practices structured as pass-through entities, the continuation of the 20% Qualified Business Income (QBI) deduction is particularly relevant. This deduction allows eligible businesses to deduct up to 20% of their qualified business income, effectively reducing taxable income. Without legislative action, this benefit may expire, potentially increasing tax liabilities for many dental practitioners. 

Reinstatement of 100% Bonus Depreciation

The administration is considering reinstating 100% bonus depreciation retroactively. This provision would enable dental practices to immediately deduct the full cost of qualifying equipment and property in the year of purchase, rather than depreciating the assets over time. For practices planning to invest in new dental equipment or technology, this change could offer substantial tax savings, if it happens. 

Potential Reduction in Corporate Tax Rates

A proposal to lower the corporate tax rate from the current 21% to 15% is under discussion. For dental practices operating as C-corporations, this reduction could result in significant tax savings, enhancing cash flow and providing opportunities for reinvestment into the practice. 

Impact on Dental Mergers and Acquisitions

The current political climate introduces uncertainty in the dental mergers and acquisitions (M&A) market. Factors such as potential tax law changes and economic policies may influence practice valuations and the feasibility of transactions. Dental professionals considering buying or selling a practice should closely monitor these developments and consult with us so we can help you navigate the evolving landscape. 

Personal Tax Considerations

On a personal level, proposed tax policies may affect individual dental professionals. Discussions include reducing the top long-term capital gains tax rate from 20% to 15%, which could influence investment strategies and financial planning. Additionally, potential changes to deductions and credits may impact personal tax returns. Stay informed and reach out to us so we can put together a tax plan that optimizes your personal outcomes. 

The evolving tax landscape under the current administration presents both opportunities and challenges for dental professionals. It is essential to stay abreast of policy changes to ensure both your personal and practice-related financial strategies are optimized in response to these developments.