2026 Tax Changes Every Dental Practice Owner Should Know

Key Takeaways

  • Estate tax thresholds are increasing, creating new opportunities for wealth transfer and succession planning.
  • Standard deductions and tax brackets are increasing for 2026, which could impact how much you owe or how much you save.
  • Credits and exclusions, including the adoption credit and earned income tax credit, are getting inflation adjustments that could benefit your household.
  • Business-related benefits, like the childcare tax credit and flexible spending limits, are rising, offering more ways to manage expenses.

The IRS has announced its annual inflation adjustments for 2026, and they can add up to big differences for dental practice owners and their families. These changes will apply to tax returns filed in 2027, but now is the time to start planning so you’re not caught off guard.

Bigger Standard Deductions for Most Filers

One of the most notable updates is the higher standard deduction, which reduces the amount of income subject to tax. For 2026, the new amounts are:

  • $32,200 – Married couples filing jointly
  • $16,100 – Single filers or married filing separately
  • $24,150 – Heads of household

This means you’ll keep more of your income tax-free, which can be especially valuable if you’re reinvesting profits into your practice or saving for retirement.

Updated Tax Brackets: Where Your Income Falls Matters

While the top marginal tax rate remains 37%, income thresholds are shifting upward. Here’s how the 2026 brackets break down for single filers (married filing jointly thresholds in parentheses):

  • 35% for income over $256,225 ($512,450)
  • 32% for income over $201,775 ($403,550)
  • 24% for income over $105,700 ($211,400)
  • 22% for income over $50,400 ($100,800)
  • 12% for income over $12,400 ($24,800)
  • 10% for income below $12,400 ($24,800)

For practice owners, these bracket shifts could affect how you time income, bonuses, or equipment purchases. Strategic planning now can help reduce your overall tax liability.

Planning for the Future: Estate and Gift Tax Updates

Succession planning is essential for any dental practice, and new thresholds may open the door for more tax-efficient transfers:

  • Estate Tax Exemption: Rises to $15 million, up from $13.99 million.
  • Annual Gift Exclusion: Remains at $19,000, while gifts to a non-U.S. citizen spouse increase to $194,000.

If you’re thinking about transitioning your practice or passing wealth to the next generation, these changes could significantly reduce your tax burden.

Business and Employee Benefits: Expanded Opportunities

Running a practice isn’t just about patient care; it’s also about smart business decisions. Several inflation adjustments for 2026 could impact how you compensate and support your team:

  • Child Care Tax Credit: Increases from $150,000 to $500,000 for employer-provided care (up to $600,000 for eligible small businesses).
  • Flexible Spending Accounts (FSA): The annual salary reduction limit increases to $3,400, with a $680 carryover option.
  • Qualified Transportation Benefits: Monthly limits increase to $340.

These higher limits provide more ways to offer competitive benefits, which can support retention and reduce turnover in a tight labor market.

Key Personal and Family Tax Benefits

In addition to practice-level planning, individual taxpayers will see changes that can impact household finances:

  • Adoption Credit: Up to $17,670, with $5,120 refundable.
  • Earned Income Tax Credit (EITC): The maximum credit for families with three or more children increases to $8,231.
  • Foreign Earned Income Exclusion: Rises to $132,900.

These adjustments offer new planning opportunities, particularly for dental professionals with growing families or global income considerations.

Why Early Planning Matters for Dental Practices

These changes don’t just affect your next return; they can shape your entire tax strategy. Whether it’s timing revenue and expenses, updating your compensation structure, or planning for succession, proactive tax planning is key to minimizing what you owe and maximizing what you keep.

At Edwards & Associates, we work exclusively with dental professionals to translate IRS changes into actionable strategies for your practice and personal wealth. The earlier we start planning, the more opportunities we have to protect your income and grow your financial future.

The 2026 tax landscape is shifting in ways that could directly affect your practice, your team, and your personal finances. Don’t wait until tax season to react; plan ahead for the most flexibility.

What the Government Shutdown and IRS Furlough Mean for You

Key Takeaways

  • The IRS is operating at half capacity as roughly 34,000 employees have been furloughed during the government shutdown that began on October 1, 2025.
  • Electronic filing and payments continue as normal, but audits, taxpayer phone support, and correspondence are on hold until the government reopens.
  • Taxpayers who filed extensions until October 15 should still file and pay on time. The IRS continues to process returns, but delays in confirmations or refunds are likely.
  • Dental practice owners can expect slower IRS communication and potential backlogs, but filings submitted electronically remain secure.
  • For current Edwards & Associates clients, no action is required. Our team continues managing all submissions and monitoring IRS updates on your behalf.
  • If you aren’t yet a client, reach out to us to talk about working with a firm experienced in managing filings during government shutdowns and IRS delays.

The federal government shutdown, which began on October 1, 2025, is not significantly impacting the IRS.

On October 8, the agency furloughed nearly half of its 74,000 employees after using leftover Inflation Reduction Act funds to stay open for the first few days of the shutdown. What does that mean for taxpayers, especially dental practice owners who filed extensions and are approaching the October 15 deadline? In short, the IRS is still accepting returns and payments, but response times and certain processes are already slowing down. Here’s what we know and what we don’t.

What’s Still Running

While roughly 34,000 employees are furloughed, the IRS is keeping some “excepted” operations active, including:

  • Electronic filing and payment processing, which continue automatically
  • Limited computer systems maintenance to prevent data loss or system failure
  • Criminal investigations and disaster relief processing which fall under essential services.

Everything else, from taxpayer assistance lines to audit reviews and correspondence, is on hold. That means if your return needs manual review, or if you’re waiting on a reply or refund check, you can expect delays. 

What This Means for Dental Practices

For our clients, the good news is that we’ve already submitted or are finalizing your extension returns, and those filings are being processed electronically. The IRS’s digital systems are still functioning, and electronic payments continue to post normally.

However, some ripple effects are possible in the weeks ahead:

  • Delayed confirmations or correspondence from the IRS, especially for returns that trigger additional review
  • Longer response times to questions, adjustments, or refund requests
  • Potential backlog growth that could affect future filings if the shutdown lasts several weeks.

In other words, your filings are safe, but don’t expect the usual pace of communication or updates from the IRS until the government reopens.

What We Don’t Yet Know

Like much of the tax community, we’re still waiting for clarity on:

  • How quickly furloughed employees will return once funding is restored
  • Whether the backlog will affect next year’s filing season
  • Whether certain enforcement or compliance activities will be delayed or compressed later in the year.

The Taxpayer Advocate Service is also shut down during the furlough, removing one of the few safety valves for those caught in IRS delays.

What Our Clients Should Do

If you’re already a client of our firm, rest assured: we’re monitoring developments daily and will reach out if anything changes that could affect your filings, payments, or correspondence with the IRS. You don’t need to take any action right now. Our team will continue managing everything on your behalf and keeping you informed.

If you aren’t currently working with us but are concerned about your upcoming filing or payments, now is the time to line up a tax advisor who understands the system and how to navigate unexpected disruptions like this one. While we can’t help new clients with their 10/15 filings, we’re here to assist with future extension filings, electronic submissions, payment verification and tracking, and IRS correspondence once operations resume.

Hang Tight

The IRS shutdown is another reminder of how unpredictable the tax landscape can be. For most dental practices, this won’t create immediate problems, but it does underscore the value of having a team that stays ahead of every detail, especially when communication with the IRS is limited.

At Edwards & Associates, we keep a close eye on developments like these, so you don’t have to. If you have questions about your filing, or if you’d like to make sure your tax plan is protected no matter what happens in Washington, our team is just a call or email away.

IRS Phasing Out Paper Checks on September 30

In March 2025, the White House issued an Executive Order on Modernizing Payments to and from America’s Bank Account (essentially the IRS’s system for payments and refunds). As part of this effort, the U.S. Treasury announced that, starting September 30, 2025, it will no longer send paper checks for IRS payments. From that date forward, refunds and other federal tax payments will only be issued electronically.

For dental practice owners, this may not feel like a big shift since you’re probably already paying and receiving funds electronically. However, it’s important to understand what’s happening and how to help family members who may still rely on paper checks prepare for the change.

Why the Change Is Happening

This particular shift is part of a broader government initiative to modernize payments. Electronic transfers are faster, more secure, and more cost-effective than paper checks, and they also reduce the risk of mail theft, fraud, or lost payments, something that has grown in recent years.

What It Means for You

  • Refunds: If you typically get your IRS refund by check, you’ll need to provide direct deposit details or another electronic option going forward.
  • Payments: While details are still emerging, the IRS is expected to encourage or even require more electronic tax payments. 
  • Exceptions: Some taxpayers, such as individuals without bank accounts or those facing specific hardships, may still be able to request paper checks, but these allowances will be rare.

Why We’re Sharing This

While this change may not affect you directly, we want to ensure everyone is as informed as possible. You may have family members, especially older relatives, who still depend on paper checks. For them, this shift could feel like a big adjustment. Passing along this information now gives them time to prepare before the next tax season and allows them to set up direct deposit or look into alternatives like prepaid debit cards.

What To Do Now

  • Confirm your bank information with the IRS if you normally get refunds. You can confirm or update your bank account information through secure IRS tools like Direct Pay, EFTPS, and the IRS Online Account.
  • Encourage family members who still depend on paper checks to talk to their bank or financial advisor about electronic options.
  • Stay informed: The IRS is expected to release additional guidance on payment acceptance and exceptions over the coming days. We will do our best to keep you updated as new information is released.

Note For Those Yet to File Their 2024 Tax Return

If you have not yet filed your 2024 tax return, but plan to before the October 15 deadline, keep in mind that the new rules will apply to you. Beginning September 30, 2025, IRS refunds will only be issued electronically, and any balance due will be paid the same way. If you don’t provide valid banking information for your refund, you risk delays or even having the payment held until those details are confirmed.

At the end of the day, this change is about making the system faster and more secure. If you have any questions or want help, just let us know. We are here to help make this transition as seamless as possible. 

AI May Be Clever, But Not for Your Finances

Artificial intelligence gets a lot of hype. It can generate quick answers, summarize complex topics, and even pass the INBDE that kept you up at night with flashcards. But when it comes to your personal finances or the financial health of your dental practice, it’s a risky gamble.

According to the recently released Access to Professional Services report, 22% of Americans who turned to AI for medical advice ended up with wrong information, and 19% actually lost money after following its financial recommendations. Even more surprising, 51% of consumers admit they already use AI for financial advice, while another 27% are considering it.

Let’s pause on that for a second. Nearly one in five people lost money because they trusted an algorithm with their personal finances, and yet more than half are still doing it. That’s not efficiency; that’s wishful thinking.

Why AI Isn’t Enough

Here’s the problem: AI doesn’t know you. It doesn’t know your goals, your risk tolerance, your family obligations, or the years you’ve poured into building a dental practice. It just pulls from the internet, a place that, let’s be honest, isn’t exactly known for nuance or universal accuracy.

Sure, AI can spin out generic advice that looks good on the surface. But when the stakes involve your livelihood, your retirement, or the future of your practice, “generic” is the last thing you need. What works for a stranger online may not work for you, and the cost of getting it wrong can be steep.

The Case for Human Advice

Working with an experienced advisor isn’t about paying for information; it’s about paying for interpretation. At Edwards & Associates, we help you sort out what matters in your unique situation, anticipate problems before they derail your plans, and adjust strategies as life (and the market) changes. That’s something no algorithm can do, no matter how sophisticated it seems.

At the end of the day, your financial future deserves more than cut-and-paste advice. Don’t leave it in the hands of a machine. Work with people who know you, understand your practice, and can help you chart a path with confidence.

Don’t Let Bad Tax Advice Drill Into Your Finances

Dentists are no strangers to misinformation. Patients walk in with something they read on the internet about whitening hacks or miracle cavity cures, and you have to set the record straight. The same thing is happening with taxes, only the consequences can be far more expensive.

The IRS recently sounded the alarm about a wave of misleading tax tips spreading on social media. These aren’t just minor misunderstandings; they can lead to audits, rejected claims, and stiff financial penalties. As James Clifford, Director of Return Integrity and Compliance Services, explained: “People who follow this advice could end up with rejected claims and a penalty of up to $5,000 in addition to any other penalties that might apply.” So far, the agency has imposed more than 32,000 penalties, costing taxpayers more than $162 million. That’s a high price to pay for taking advice from a TikTok video.

It’s easy to see how these schemes hook people. Who wouldn’t want to believe there’s a hidden credit that could reduce your tax bill? But just like those too-good-to-be-true dental “hacks,” tax shortcuts you see online can do more harm than good.

The Lure of Fake Deductions

The most common scams promise credits that most taxpayers simply don’t qualify for. A few of the recent offenders include:

  • Fuel Tax Credit: This is real but reserved for very narrow uses like farming equipment or off-highway machinery. Most dentists driving to and from the office don’t qualify.
  • Pandemic-Era Leave Credits: Any claims for sick or family leave credits expired well before 2025 and are no longer available to most taxpayers. 
  • Employee Retention Credit (ERC): Designed for businesses hit by pandemic-related disruptions, but it has also expired. There were so many people filing under questionable circumstances that the IRS permanently paused new claims. 
  • R&D Tax Credits: Unless you’re inventing new dental technology in your spare time, you are very unlikely to qualify for this credit. Practice improvements will not count as “research and development.”
  • Charitable Deduction Scams: You must donate to IRS-qualified organizations to claim this deduction. Inflating donations or picking unqualified groups won’t fly, even if online promoters say otherwise. If you are unsure whether a nonprofit qualifies, we can help verify it for you. 

For dental practice owners and associates alike, falling for one of these “strategies” doesn’t just delay your refund; it can also result in penalties that eat into your hard-earned income.

Why Dentists Are Particularly at Risk

Running a practice or working as an associate often means long hours and little time to dig into the fine print of tax law. It’s tempting to lean on what you see shared by colleagues or on social platforms. But what worked (or appeared to work) for someone else could land you in serious trouble. Just as every patient case is different, every tax situation is unique.

Another danger? Unscrupulous tax preparers. Some promise outsized refunds, but don’t sign the return themselves. This is a huge red flag that you might be working with a “ghost preparer.” If the IRS comes calling, you’ll be left holding the bag. Others may use your information for identity theft.

The Case for Professional Guidance

The reality is simple: tax law is complex, and dentists face unique challenges when balancing personal and practice-related finances. From equipment depreciation to managing associate pay, your situation is nothing like the “average” taxpayer’s. That’s why advice pulled from Facebook or a message board is more likely to cause problems than provide solutions.

When you work with a qualified CPA who knows dentistry, you get:

  • Tailored advice that factors in your practice’s structure, your long-term goals, and your family’s financial picture.
  • Protection from penalties that could far exceed any short-term gain from a dubious deduction.
  • Accountability and peace of mind because your return is signed, accurate, and backed by someone who will stand by you if questions arise.

Stay Smart, Stay Safe

Just like patient care, your finances deserve expertise, not quick fixes. The internet may be full of “hidden” tax tips, but the only truly reliable path is working with a professional who understands both the IRS and the business of dentistry.

Don’t let misinformation eat away at your bottom line. If you’re unsure about a credit, deduction, or strategy you’ve heard about online, check with us before making a move. We are happy to help!

How IRS Staffing Cuts & System Strain Impact Taxpayers

Most dentists don’t spend much time thinking about how the IRS runs until something goes wrong. But when staffing levels are cut and outdated technology struggles to keep up, the ripple effects land directly on taxpayers and their advisors.

We saw this vividly during the COVID-19 years: mailrooms backed up, phone lines overwhelmed, and millions of paper-filed documents literally shredded. Unfortunately, even today, the IRS is still working with decades-old computer systems and a shrinking workforce. That combination makes routine tax administration harder than it should be, and it shows.

Longer Waits and Slower Processing

For dental practice owners expecting refunds, requesting transcripts for a business loan, or trying to resolve a tax notice, patience will be required. Reduced staffing means:

  • Refund delays can stretch for weeks or months beyond normal timelines.
  • Loan application slowdowns when lenders can’t get timely IRS transcripts to verify income.
  • Tax notices drag on, with responses and resolutions sometimes taking months or years.

Fewer Ways to Reach Real Help

Calling the IRS has never been easy, but reduced staff only makes it worse. Hold times of 30–60 minutes used to be considered long; now, taxpayers often face dropped calls or phone lines that simply aren’t staffed.

On the paper side, even though electronic filing has expanded, the IRS still requires many documents to be mailed. When those pile up, processing lags, and sometimes correspondence goes missing altogether. That leaves taxpayers in limbo, waiting for updates that may never come without repeated follow-ups.

The Cost to Small Business Owners

For busy dental professionals, the biggest hidden cost of IRS delays is time. When an issue drags on, accountants and advisors have to chase down answers, resend documents, and make repeated attempts to get clarity. That extra effort translates into higher costs for taxpayers, especially when something simple gets stuck in the system.

Why This Matters for Dental Practices

Dental practices often need timely IRS documentation to move forward with loans, refinancing, or business expansions. Delays can disrupt cash flow planning and add stress to already complex business decisions. And when the IRS is slow to process credits, refunds, or responses to tax notices, it ties up both money and attention you’d rather devote to your patients.

Looking Ahead

Ideally, government leaders would reduce tax complexity and restore IRS staffing and systems so that taxpayer services remain effective. However, under current plans, the IRS is facing deep operating and enforcement cuts, with no clear indication that Congress will reverse course anytime soon. It remains crucial for taxpayers, especially small business owners, to prepare for extended response times and reduced service levels:

  • File electronically whenever possible.
  • Keep thorough records in case correspondence is misplaced.
  • Build in extra time for loans or financial transactions that require IRS transcripts.

As your advisors, we’ll keep monitoring IRS developments and advocate for solutions that make the system work better. In the meantime, know that we’re here to help you navigate delays and reduce stress wherever possible.

Why Remitting Payroll Taxes on Time Is Critical

As a dental practice owner, your focus may be on patients, but the IRS requires just as much attention to payroll taxes. These aren’t just another line item; they’re legally classified as “trust fund taxes.” That means when you withhold federal income tax, Social Security, and Medicare from your employees’ paychecks, you’re holding those funds on behalf of the government. In the eyes of the IRS, failing to send them in promptly is more than a mistake. It’s theft, and the consequences include fines, criminal charges, and even prison time.

Real-World Cases: Payroll Tax Non-Compliance Comes at a High Cost

The IRS has made it clear that no business owner is too small or too specialized to be held accountable. Here are just a few examples.

  1. Nevada Dentist: A licensed pediatric dentist pled guilty to failing to remit payroll taxes, proving that even small dental practices face criminal enforcement.
  2. Virginia Business Owner: A Chester, VA, business owner was sentenced to two years in prison for withholding payroll taxes from employees’ wages but failing to send them to the IRS.  
  3. New Hampshire CEO: A tech company CEO in New Hampshire withheld but never paid millions in payroll taxes between 2014 and 2021. He received a 2½-year sentence and had to pay restitution exceeding $639,000. 
  4. Florida Payroll Provider: In an example of someone who definitely knew better, a payroll company owner diverted client tax funds for personal use and was sent to prison for more than four years. 
  5. Reality TV Personality: Peter Thomas, of The Real Housewives of Atlanta, was sentenced to 18 months and ordered to repay $2.5 million for failing to pay employment taxes across several businesses.  

Why This Matters for Your Practice

Payroll taxes are one of the most serious obligations you carry as a business owner. Even if you delegate payroll tasks to a staff member, accountant, or outside service, the IRS still holds you personally responsible.

Some owners convince themselves they’ll “borrow” from payroll tax funds to get through a tough month. But even a short delay counts as willful evasion in the eyes of the IRS. The result? Mounting penalties, damaged reputations, and, in the worst cases, criminal charges.

For dental practice owners already juggling patient care, staff management, and overhead costs, the added risk of payroll tax missteps is too great to ignore.

How to Stay Compliant

For most dental practices, the simplest and safest option is to partner with a reputable payroll provider, like ADP, that takes on the legal responsibility of calculating and remitting payroll taxes on time and in the correct amounts. Be sure to confirm that if the IRS ever issues a payroll-tax notice, they will handle the response at no additional charge. That shifts the risk away from your practice, so you and your team can focus on running the business and caring for patients, not trying to master the complexities of payroll law. And considering that IRS fines can be steep, as we established above, the cost/benefit ratio – and ability to sleep well at night – makes sense for most practices.

If you decide not to outsource, you’ll need to put strong guardrails in place to stay compliant:

  1. Fund immediately – Treat payroll tax liability as untouchable. Set the money aside as soon as payroll runs.
  2. Know your schedule – IRS deposit rules vary. Some practices remit monthly, others semi-weekly. Understand which applies to you.
  3. Automate where possible – Payroll software can reduce the risk of human error, but it won’t assume legal responsibility the way a provider like ADP does.
  4. Keep funds separate – Always store payroll taxes in a dedicated account so they are never mixed with operating funds.
  5. Act fast if you fall behind – The IRS offers options like installment agreements and voluntary disclosure, but only if you address problems quickly.

Remitting payroll taxes on time isn’t optional; it’s a legal non-negotiable. Whether you rely on a provider or manage it in-house, the key is to treat these funds as sacred. For many practice owners, outsourcing is the easiest way to eliminate the risk and sleep better at night.

If you’re ever unsure about your payroll tax process or if you’ve already fallen behind, reach out to us immediately. The cost of prevention is always lower than the cost of IRS enforcement, whether measured in dollars, reputation, or even freedom.

How Hiring Your Children Can Cut Your Tax Bill

With the 2025 tax-planning season approaching, we know that many of you are looking for smart, legal strategies to reduce your tax burden. One option that’s easy to overlook but made more attractive under the One Big Beautiful Bill Act (OBBBA) is hiring your children.

How OBBBA Makes Hiring Your Kids a Smart Tax Move

The OBBBA permanently eliminated the dependent exemption but raised the standard deduction for single taxpayers to $15,750 in 2025 (up from $15,000 in 2024, with annual inflation adjustments). This change allows your child to earn up to $15,750 in W-2 wages tax-free if they have no other income, since the standard deduction fully offsets those earnings.

For dental practice owners, this opens the door to both family and practice benefits, as long as you pay a fair W-2 salary for legitimate, documented responsibilities. Common examples include managing your social media (and in some cases serving as models for those campaigns) or coordinating community events, but age-appropriate work like filing, office organization, janitorial work, or other support tasks may also qualify.

Here’s what this strategy can mean for you:

  • Avoid Federal Income Tax for Your Child – As long as their earnings stay within the standard deduction, they owe nothing in federal income tax.
  • Potentially Enjoy Payroll Tax Savings – If your practice is a sole proprietorship or a partnership with both parents as partners, wages paid to children under 18 are also exempt from Social Security and Medicare taxes.
  • Lower Your Own Taxable Income – Wages paid to your child are deductible to the practice, reducing taxable income and effectively shifting dollars into a zero-tax bracket.

Just like any other employee, your child must actually perform the work, and you’ll want to maintain job descriptions, timesheets, and payroll records to demonstrate the arrangement is legitimate.

Please Note: To use this strategy, children must be claimed as dependents on your tax return. The biggest payroll tax savings apply when they are under 18. Children 18 and older can still be employed, and their wages remain deductible, but payroll taxes will apply.

Hiring Your Kids: More Than Just Tax Savings

Hiring your children isn’t just about reducing your tax bill; it can also give them valuable work experience and bring fresh energy to your practice’s marketing and community engagement. With the right documentation and planning, it’s a compliant strategy that supports your practice, your family, and your long-term tax planning.

If you’d like to explore whether this strategy makes sense for your practice, our team is here to help during your upcoming tax-planning session.

What the Latest Federal Tax Bill Means for Dental Practices and Their Owners

After months of debate, Congress has passed an enormous budget reconciliation bill with a wide range of tax changes affecting small businesses and individual taxpayers alike. While the headlines focus on sweeping economic measures, many of the provisions could directly shape how dental practices operate, invest, and plan ahead.

If you own or manage a dental practice, here are the highlights you should know and steps you might consider in response.

New Incentives for Equipment and Technology Investments

One of the most significant changes is the return of full expensing for major purchases. If you’re planning to upgrade your equipment, invest in advanced imaging technology, or modernize your administrative systems, the revised Section 179 rules will allow you to deduct up to $2.5 million of qualifying purchases in the year you buy them.

Previously, deductions had to be spread out over time, but the accelerated write-off can now provide immediate tax relief and help improve cash flow. Keep in mind that if your total qualifying purchases exceed $4 million, the deduction begins to phase out.

More Room to Deduct Interest Expenses

If you’ve taken out loans to renovate your office, open a second location, or acquire another practice, the rules for deducting interest payments just became more favorable. The new law allows interest deductions to be calculated using EBITDA, earnings before interest, taxes, depreciation, and amortization, rather than the narrower EBIT measure.

This adjustment increases the amount you can deduct each year, which can be especially helpful for practices carrying debt from growth or equipment financing.

Expanded Research and Development (R&D) Deductions

While many dental practices don’t think of themselves as research businesses, certain investments – like developing proprietary patient education materials, implementing new digital workflows, or testing innovative service models – can qualify for R&D deductions. Under the bill, smaller businesses with less than $31 million in gross receipts (which is most dental practices) can immediately deduct eligible R&D costs rather than amortizing them over time. This change rewards innovation and may help offset the expense of improving patient care.

QSBS Exclusion Returns for C-Corporations

If your practice is organized as a C-corporation and you’re considering selling your business in the next few years, take note of the revived Qualified Small Business Stock (QSBS) exclusions. Owners who meet certain requirements, including holding their shares for at least five years, may be able to exclude up to 100% of gains from federal tax when they sell. This could translate into substantial tax savings at the time of exit or succession planning.

SALT Deduction Cap Temporarily Increased

The bill raises the cap on state and local tax (SALT) deductions to $40,000, with a gradual phaseout beginning at $500,000 of income. However, this relief is temporary; the cap is scheduled to revert to $10,000 in 2030. For dental practice owners, especially those operating pass-through entities, this creates a narrow planning window. It’s a good time to reevaluate whether the entity-level SALT workaround remains effective and how to best optimize deductions while the higher cap is in place. Strategic tax planning now can help minimize liabilities before the cap drops again.

Personal Tax Changes That Matter to Practice Owners

While these business provisions can influence practice finances, there are also personal tax updates to be aware of:

  • Expanded Child Tax Credit: Temporarily increased to up to $2,500 per qualifying child, with more flexibility in how it phases in.
  • New Deductions for Common Expenses:
    • Up to $6,000 in additional standard deduction for taxpayers over 65.
    • Interest deductions on loans for U.S.-assembled electric vehicles, up to $10,000.
    • Above-the-line deductions for overtime and tip income (though not likely as relevant for dental offices).
  • No Federal Tax on Tips: While this mostly affects hospitality workers, employees with tip income will no longer pay federal tax on it.
  • Individual Tax Rates Extended: The lower tax brackets set in 2017 are extended through 2028, helping many owners save on personal income tax.

How Your Practice Can Prepare

Navigating these changes doesn’t have to be overwhelming. Here are a few things you should consider:

  • Evaluate planned purchases of equipment and technology to optimize deductions.
  • Review financing structures to maximize interest expense benefits.
  • Assess your entity type and QSBS eligibility if a sale or transition is on the horizon.
  • Update your personal tax plan to leverage available deductions and credits.

Even though this legislation is complex, and this just scratches the surface of what it contains, it creates some opportunities to strengthen your practice’s financial position while supporting your personal goals. If you’d like to discuss how these updates apply to your specific situation, we’re here to help.

It’s Time to Do Some Mid-Year Tax Planning 

As the summer heats up, it’s not just a good time for vacations, it’s also the perfect time to check in on your dental practice’s financial health. Mid-year tax planning can help you avoid surprises at year-end and give you time to make strategic decisions that impact your bottom line.

Look at the Numbers Now, Not in December

Too often, dentists wait until the end of the year – or worse, tax season – to review their financial performance. But by now, you’ve got six months of data that can tell a meaningful story about how the rest of the year might unfold. Are collections on track? Are expenses creeping up? Did you invest in new equipment or hire additional staff?

This is the time to sit down and compare your actual year-to-date performance against your projections. If you’re tracking ahead, it may be a good time to consider purchasing equipment, increasing retirement plan contributions, or planning charitable donations. If you’re falling behind, you still have time to course-correct.

Estimate Your Tax Liability

Based on your current earnings, we can help you estimate what your tax liability might look like by year-end. This can be a critical step in determining whether to adjust your quarterly tax payments to avoid underpayment penalties or whether there’s room to invest more in your practice or your future.

Take Advantage of Tax-Saving Opportunities

Mid-year planning allows time to explore tax-saving strategies tailored to your practice. These might include:

  • Section 179 deductions for equipment purchases
  • Maximizing retirement contributions through a 401(k), SEP IRA, or defined benefit plan
  • Health savings accounts (HSAs) or Flexible Spending Accounts (FSAs)
  • Reviewing entity structure to determine if it’s still the most tax-efficient option
  • Hiring family members for legitimate business roles to reduce taxable income

Evaluate Overhead and Profit Margins

Often our dental clients are so focused on patient care that they don’t realize how much their overhead is eating into profits. Mid-year is a good time to review vendor contracts, supply costs, and staffing efficiency. Small tweaks now can lead to big savings by year-end.

Don’t Go It Alone

Tax laws change frequently, and every practice is unique. The best way to take advantage of mid-year planning is to reach out to us to gain a solid understanding of the challenges and opportunities specific to your field.

Let’s Plan Ahead Together

Mid-year is more than just a checkpoint, it’s a chance to proactively manage your practice’s financial success. If you haven’t yet scheduled a mid-year review, now is the time. Your future self – and your bottom line – will thank you.

What Dentists Should Know About Proposed Senate Tax Changes

In May, we wrote about what dental practice owners should know about the tax bill. Now a new round of tax proposals is making its way through the Senate that include some significant shifts that could impact both your personal finances and how you manage your dental practice. While these proposals are still under debate and will continue to evolve, it’s worth taking a look at a few areas that may affect dentists more directly than others.

Here’s a breakdown of some of the key provisions and what they could mean for you:

  1. State and Local Tax (SALT) Deductions Could Shrink: The proposed Senate version would lower the cap on SALT deductions to $10,000, a significant reduction from the $40,000 limit in the House bill. This change could limit deductions for dentists with higher incomes, significant property taxes, or multiple real estate holdings. If you typically itemize deductions, this is a key detail to factor into your tax planning.
  2. Changes to Business Tax Breaks May Help Practices That Invest: The Senate’s proposal includes some long-term benefits for business owners. If you’ve recently invested – or are planning to invest – in new equipment or technology for your practice, the proposed extension of 100% bonus depreciation could continue to be a helpful tool. The plan also preserves full deductions for research and development expenses and depreciation calculations based on more favorable interest expensing rules. Practices looking to expand or modernize may find these updates particularly beneficial.
  3. Medicaid Shifts Could Affect Patient Access: While Medicaid likely isn’t a huge part of the revenue stream for most dental practices, any policy changes that reduce access to care could indirectly affect volume in practices that serve low-income families. The proposed Senate revisions call for stricter work requirements for families receiving Medicaid, especially for parents with older children. Practices offering Medicaid or CHIP-covered services should monitor how this plays out at the state level.
  4. Bonus Standard Deductions for Seniors: If you’re approaching retirement, the Senate proposal includes a larger standard deduction for seniors, rising to $6,000. This could create a modest benefit for older dental professionals still practicing or taking retirement distributions.
  5. Adjustments to the Child Tax Credit: The Senate version also slightly bumps up the child tax credit and makes it permanent, which may help younger dentists with families. While the increase isn’t dramatic, it does provide some predictability compared to temporary measures in previous years.
  6. Be Mindful of New Payment Processing Taxes: Although not highlighted in the Senate bill, changes to how foreign investors and certain processing systems are taxed may eventually affect credit card fees and payment processors, services many practices rely on. Now is a good time to talk to your payment vendor to understand how these shifts may trickle down.

Planning Now Can Save Later

While these tax proposals are still subject to change, they offer a glimpse into where federal fiscal policy is headed. As a dental practice owner or administrator, staying ahead of these developments can help you avoid surprises, especially when it comes to deductions and business investment decisions.

Have questions about how these changes might impact your tax strategy this year or next? Our team specializes in supporting dental professionals. Let’s talk about how we can keep your practice financially strong and future-ready.