What Tax-Saving Strategies Should Dental Practice Owners Consider Before 2026?

ARTICLE | October 28, 2025

Authored by Aprio

Summary: With the passing of the One Big Beautiful Bill (OBBB) last July 2025, some tax credits and deductions will remain unchanged, while others may have updates that warrant your attention. It’s important to consult with your tax advisor to discuss the state-specific taxes that could impact individuals and businesses, depending on the complexity of your tax situation.

What are the Most Overlooked Tax Credits or Deductions?

Dental practice owners often miss out on significant tax savings by overlooking several key deductions and credits. Understanding and leveraging these lesser-known financial tools is essential for any practitioner looking to reduce their tax burden and maximize the profitability of their practice.

1. Retirement Plan

One of the most common and widely known effective tax-saving strategies is retirement plan funding. It’s highly encouraged to set up a retirement plan as early as possible so you can get the most benefits. Under the SECURE 2.0 Act, small businesses that implement retirement plans may be eligible for valuable tax credits. In the first three years, a startup tax credit can cover up to $5,000 annually for plan setup and administration costs.

Additionally, a separate employer contribution credit offers up to $1,000 per employee per year for matching or profit-sharing contributions, gradually decreasing over five years. Furthermore, there are certain limitations, such as situations where dental practice owners may not qualify for these benefits. These tax credits help subsidize the startup and administrative costs of a 401(k), depending on the number of employees a business has.

Again, these credits could be substantial—if you started a new retirement plan within the past few years, you may still be eligible for some of the credits, even if you didn’t take advantage of them initially.

2. Profit-Sharing Contribution

This is where the time value of money comes into play. Many retirement plans have the option to make a profit-sharing contribution towards your retirement plan. The contributions are optional, enabling businesses to decide annually whether or not to make them. You have until the extended due date of that year’s tax return to make a profit-sharing contribution.

For example, if you are a single-member LLC filing on Schedule C and you miss the April 15 deadline, you still have until October 15 to make that contribution and receive a deduction on your 2025 tax return. Even if you are a cash-basis business for tax purposes, which most dental practices are, you can still get a deduction on your tax return. Even though the payment is made outside of the calendar year tax period, your money is able to appreciate over several additional months.

3. The Augusta Rule

The “Augusta Rule,” established under IRC Section 280A(g), permits dental practice owners to rent their personal residences to their business for up to 14 days each year without incurring tax liabilities. The business gets a deduction for the rent expense, while the business owner does not recognize the rental income. The Augusta Rule enables dentists to host team events or meetings at their homes, saving substantial costs by not renting conference rooms or hotels for professional endeavors.

By taking advantage of this rule, dental practice owners can achieve significant tax savings, which can amount to thousands of dollars each year.

Bonus Depreciation vs Section 179

Bonus depreciation and Section 179 are both deductions, and the key difference between the two was the percentage you can take. Bonus depreciation is back to 100% retroactive to January 20, 2025, and it will remain at 100% moving forward. In contrast, with Section 179, you take the full amount at all times, and there is no phase-out for this deduction. Now, the primary difference is that bonus depreciation can create a loss, while Section 179 cannot.

For dental practices structured as S corporations or partnerships, owners must have sufficient basis for any losses that are reported on their tax return. Additionally, bonus depreciation often has significant state tax implications—many states do not recognize it, so advisors generally recommend taking the Section 179 deduction unless specific situations require bonus depreciation. Ultimately, it’s best to consult your tax advisor to assure they have all the details and can help you choose the most beneficial depreciation method.

Pass-Through Entity Tax (PTET)

The Pass-Through Entity Tax is a strategic approach that offers additional federal tax deductions. While it is not a tax credit, PTET enables businesses to deduct state income taxes that would otherwise be disallowed under the state and local tax (SALT) deduction cap on the owner’s individual return. In essence, electing PTET enables businesses to pay state income taxes at the entity level on behalf of the owners, and claim a federal deduction at the practice level.

State and Local Taxes (SALT)

The OBBB raised the SALT limit from $10,000 to $40,000 for 2025. The limit will increase by 1% annually through 2029 and will revert to $10,000 in 2030. However, the deduction will begin to phase out once your modified adjusted gross income (MAGI) exceeds $500,000 for single filers and married couples filing jointly, and $250,000 for married filing separately.

What are the Most Common Tax Planning Mistakes Among Dental Practice Owners?

Tax planning can be a stressful and tedious process if not implemented properly. Engaging with a CPA or tax advisor is essential to leverage effective tax-saving strategies as early as possible. The best time to start adopting a proactive and intentional approach is always now. Here are some common tax planning mistakes that dental practice owners make in their tax planning:

• Lack of documentation on tax strategies.
• Spending money just to save on taxes.
• Failing to communicate regularly with your tax advisor.
• Not timing your expenses appropriately.

Tax planning should always be thoroughly documented to substantiate your positions in case they are ever challenged by tax authorities. . Additionally, spending money solely to save on taxes is not recommended because ultimately, the goal is to generate cash flow. If you’re buying equipment only to save taxes, it may hinder your financial progress and wealth-building opportunities. With any major purchase, you should always consider what type of return on investment (ROI) you would generate. However, if you invest in equipment and use it intentionally and strategically, the ROI will yield accordingly and help you reach your long-term financial goals.

Are There Expiring Credits or Incentives Likely to Impact Dental Practices?

Depending on how you established your dental practice and your financial objectives, here are a few expiring tax credits and deductions that could significantly impact your practice:

The Residential Clean Energy Credit

The residential clean energy credit, also known as the solar tax credit, enables homeowners or dental practice owners to reduce their tax liabilities by installing qualifying solar equipment on their properties. For 2025, the federal government still offers a 30% residential clean energy credit on the total cost of your business’s solar setup.

According to the IRS, these are the qualified expenses:

• Solar electric panels
• Solar water heaters
• Wind turbines
• Geothermal heat pumps
• Fuel cells
• Battery storage technology (beginning in 2023)
• Labor costs for on-site preparation, assembly, or original installation of the property

With the passing of the OBBB, the residential clean energy credit will end on December 31, 2025. Dental practice owners interested in claiming this tax credit should plan their transactions ahead of the December 31 deadline.

Final Thoughts: Why Early Tax Planning is Essential and Beneficial for Your Dental Practice

It’s never too late to begin saving from a tax standpoint. Treating tax planning as a year-round strategy rather than a last-minute scramble is one of the most impactful decisions you can make for the financial health of your dental practice. The credits, deductions, and tips we have mentioned above serve as your guide in navigating your tax situation with your Dental CPA or tax advisor. Diligent tax planning enables dental practice owners to focus on what truly matters: providing exceptional care to patients and building a thriving, profitable practice.

Please connect with your advisor if you have any questions about this article.

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This article was written by Aprio and originally appeared on 2025-10-28. Reprinted with permission from Aprio LLP.
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