Dental Practice Taxes: What New Owners Need to Know in 2026

Buying or starting a dental practice means taking on a business tax structure that most dentists never learned in dental school. This guide covers the parts that matter in year one.

The two tax layers of a dental practice

1. Practice entity taxes

Most dental practices operate as an S-Corp or PLLC taxed as an S-Corp. The structure:

• You pay yourself a “reasonable salary” (subject to payroll taxes)
• Remaining profit passes through as distributions (not subject to self-employment tax on the salary portion)
• The practice files its own return (Form 1120-S) but pays no federal income tax at the entity level

2. Personal taxes

Practice profit flows to your personal return. Your bracket depends on total household income: for most owner-dentists, 24%–35% federal.

Payroll taxes: the part that surprises new owners

As soon as you have staff (including yourself on salary), you’re responsible for:

• Employee share: 7.65% withheld from paychecks
• Employer share: 7.65% paid by the practice
• Unemployment taxes (state + federal FUTA)
• Quarterly payroll filings (Form 941)

The IRS is aggressive about payroll taxes: they survive bankruptcy and are often assessed personally against owners. Use a payroll service from month one; this is not the place to save money.

The equipment deduction that changes your numbers

Dentistry is equipment-heavy: chairs, imaging systems (CBCT, panoramic), handpieces, compressors, lasers. Two rules matter:

• Section 179: deduct the full cost of qualifying equipment in the year you put it in service, up to limits (over $1 million for 2025)
• Bonus depreciation: an additional immediate write-off on top of Section 179 (100% through 2023, phasing down in later years: verify the current percentage)

Example: a $120,000 CBCT scanner purchased in year one can produce a $120,000 deduction (Section 179), which at a 30% combined tax rate saves roughly $36,000 in taxes in that year.

Write-offs specific to dentistry

• Lab fees (crowns, bridges, dentures sent out): fully deductible
• Materials and supplies: consumables are deducted as used
• Sterilization equipment and maintenance: deductible
• License renewals and DEA registration: deductible
• Continuing education: courses, travel, and lodging
• Malpractice insurance: deductible
• Practice management software and imaging software: deductible (Section 179 covers software too)

Buying vs. starting: the tax difference

• Buying an existing practice: a portion of the purchase price is allocated to goodwill and patient lists: those are amortized over 15 years, not deducted upfront. Negotiate the allocation carefully; it changes your tax picture for 15 years.
• Starting from scratch: you avoid goodwill, but you absorb all setup costs as you go.

If you’re buying, have a CPA review the purchase allocation BEFORE you sign: this is one of the largest financial decisions in the deal.

Estimated payments

Like all self-employed professionals, owner-dentists pay quarterly estimated taxes (April, June, September, January). The safe harbor (100% of last year’s tax, 110% above $150,000 AGI) protects you from penalties in the first year.

The one thing to do in your first 90 days

1. Set up a separate practice bank account and card (non-negotiable)
2. Engage a payroll service before your first hire
3. Choose a CPA who works with dental practices: dental-specific CPAs know lab fees, equipment schedules, and the goodwill allocation issues
4. Set up accounting software with a chart of accounts built for practices (see our guide to practice accounting software)

The bottom line

A dental practice owner’s total tax burden typically lands at 30%–40% of pre-tax profit after entity choice, equipment deductions, and payroll. The three habits that protect you: correct entity election, payroll service from day one, and Section 179 planning with a CPA.

Last checked: August 21, 2026. Confirm current limits and percentages with a CPA.