Tax season doesn’t have to be the most stressful time of year for dental practice owners. With the right strategy — and a clear understanding of what the IRS allows — you can significantly reduce your tax burden and reinvest those savings back into your practice.
The 2026 tax year brings both new opportunities and important changes that Virginia dental professionals need to understand. Whether you’re a solo practitioner in Fredericksburg or running a multi-location practice across Northern Virginia, these deductions can make a meaningful difference to your bottom line.
Section 179: The Equipment Deduction That Pays for Itself
If you purchased dental equipment in 2026 — chairs, digital X-ray systems, CAD/CAM units, sterilization equipment, or practice management software — Section 179 lets you deduct the full purchase price in the year you place it in service, rather than depreciating it over several years.
For 2026, the Section 179 deduction limit is $1,250,000, with a phase-out threshold beginning at $3,130,000 in total equipment purchases. For most dental practices, this means you can write off the entire cost of qualifying equipment purchases in a single year.
What qualifies:
- Dental chairs, operatory equipment, and cabinetry
- Digital imaging and X-ray systems
- Practice management and dental software
- Office furniture and computers
- Leasehold improvements (HVAC, lighting, flooring)
Pro tip: If you’re planning a major equipment upgrade, timing matters. Equipment must be purchased and placed in service by December 31, 2026, to qualify for this year’s deduction.
Bonus Depreciation Changes You Need to Know
After years of 100% bonus depreciation, the phase-down that began in 2023 continues. For 2026, bonus depreciation drops to 40% (down from 60% in 2025 and 80% in 2024).
This makes Section 179 even more critical for dental practices making significant capital investments. The two deductions work together — you can apply Section 179 first, then use bonus depreciation on any remaining eligible amount.
If you’ve been putting off equipment purchases, the declining bonus depreciation schedule is a clear signal: the sooner you invest, the more you save.
Retirement Plan Contributions: Tax Savings That Build Wealth
As a dental practice owner, retirement contributions are one of the most powerful tax reduction strategies available. Here’s what you can contribute for 2026:
- 401(k) employee deferral: Up to $23,500 (plus $7,500 catch-up if you’re 50 or older)
- SEP-IRA: Up to 25% of net self-employment income, maxing out at $70,000
- Defined benefit plan: Depending on your age and income, contributions can exceed $250,000 annually
A well-structured retirement plan doesn’t just reduce your current tax bill — it builds long-term wealth while lowering your practice’s taxable income. If you’re still using a basic SEP-IRA, it may be worth exploring whether a cash balance plan or solo 401(k) could offer greater savings.
Staffing and Employee Benefits
Your team is your biggest expense — and your biggest deduction. Wages, salaries, and bonuses paid to W-2 employees are fully deductible. But the deductions don’t stop at payroll:
- Health insurance premiums for employees (and yourself, if you’re a sole proprietor or S-corp owner)
- Continuing education expenses, including CE courses, licenses, and professional memberships
- Uniforms and scrubs provided to staff
- Employee retirement plan contributions (your employer match)
- Workers’ compensation and payroll taxes
Virginia dental practices competing for skilled hygienists and assistants should also consider that robust benefits packages — while deductible — serve double duty as a recruitment and retention tool.
Practice Overhead Deductions
The day-to-day costs of running your dental practice are largely deductible. These add up fast:
- Rent or mortgage interest on your practice space
- Dental supplies and materials (composites, impression materials, disposables)
- Lab fees for crowns, bridges, and prosthetics
- Utilities (electric, water, internet, phone)
- Insurance (malpractice, general liability, property)
- Marketing and advertising (website, Google Ads, print materials)
- Professional services (accounting, legal, IT support, consulting)
- Loan interest on business-related financing
One area dental practices commonly overlook: business use of a vehicle. If you drive between practice locations, to CE events, or to the bank for practice deposits, you can deduct mileage at the 2026 standard rate or actual vehicle expenses.
The Qualified Business Income Deduction (QBI)
If your dental practice operates as a pass-through entity — S-corporation, partnership, or sole proprietorship — you may qualify for the Section 199A deduction, which allows you to deduct up to 20% of qualified business income.
However, dental practices fall under the “specified service trade or business” (SSTB) category, which means the deduction phases out at higher income levels:
- Single filers: Phase-out begins at $191,950
- Married filing jointly: Phase-out begins at $383,900
If your taxable income falls below these thresholds, the QBI deduction can be substantial. If you’re near the phase-out range, strategic tax planning — such as maximizing retirement contributions or timing income and expenses — can help you stay within the qualifying range.
Virginia-Specific Considerations
Virginia dental practice owners face state-level tax considerations beyond federal obligations:
- Virginia business license tax: Deductible as a business expense
- Virginia Business, Professional, and Occupational License (BPOL) tax: Varies by locality; Fredericksburg, Stafford, and Spotsylvania each have different rates
- State income tax: Virginia’s top marginal rate is 5.75% on income over $17,000 — relatively flat compared to neighboring states
- Sales tax on dental equipment: Virginia charges sales tax on tangible personal property; factor this into equipment purchase calculations
- Conformity with federal tax code: Virginia generally conforms to the federal Internal Revenue Code, meaning most federal deductions flow through to your state return
If your practice operates across multiple Virginia localities, ensure you’re properly allocating revenue and expenses to take advantage of local tax structures.
Home Office Deduction for Dentists
If you use a dedicated space in your home regularly and exclusively for practice administration — bookkeeping, treatment planning, insurance processing — you may qualify for the home office deduction. This is particularly relevant for practice owners who handle administrative work outside of clinical hours.
The simplified method allows a deduction of $5 per square foot, up to 300 square feet ($1,500 maximum). The regular method calculates actual expenses proportional to the office’s percentage of your home.
Tax Planning Strategies That Pay Off Year-Round
The biggest mistake dental practice owners make is treating tax planning as a once-a-year event. The practices that save the most take a proactive approach:
1. Review financials quarterly to estimate tax liability and adjust withholdings
2. Time major purchases to maximize Section 179 and depreciation benefits
3. Separate personal and business expenses meticulously — commingled accounts are an audit magnet
4. Track every deductible expense using cloud-based accounting software
5. Work with a dental-specialized CPA who understands the unique financial landscape of dental practices
A general accountant can file your return. A dental accounting specialist can save you tens of thousands of dollars by understanding the nuances of practice ownership, associateship structures, equipment financing, and production-based compensation.
Take Control of Your Practice’s Tax Strategy
Every dollar you save in taxes is a dollar you can reinvest in your team, your technology, or your future. The 2026 tax landscape offers significant opportunities for dental practice owners who plan ahead — but those opportunities require action before December 31.
If you’re not sure whether you’re taking full advantage of every deduction available to your practice, it’s time for a conversation. At Quantum Accounting & Tax, we specialize in dental practice accounting and tax strategy for Virginia professionals. We don’t just file returns — we help you build a financial strategy that grows with your practice.
Ready to keep more of what you earn? Contact Quantum Accounting & Tax today to schedule a tax planning consultation.
