What 2026 Tax Changes Could Mean for Dental Practice Owners

As 2025 draws to a close, dentists across the country are preparing for a wave of potential tax changes that could meaningfully impact practice profitability in 2026. While not all updates are finalized, the IRS has already signaled several areas of focus that practice owners should watch closely. For many dental professionals, understanding these shifts in advance can make the difference between a smooth transition and an unexpected tax bill. 

The evolving tax landscape affects more than year-end filings. It influences how dentists structure compensation, plan equipment purchases, manage retirement contributions, and make decisions about reinvesting in their practices. With dental practices facing rising labor costs, increased overhead, and new technology demands, the financial ripple effects of tax updates in 2026 will require owners to stay proactive—not reactive. 

Potential Changes to Deductions and Business Expenses 

One area dentists should monitor closely is how deductions may shift. Several existing provisions that benefit small businesses—including bonus depreciation, Section 179 expensing, and the deductibility of certain business-related costs—could see adjustments as federal tax policy evolves. Any changes in these areas may alter the timing or value of major equipment purchases, buildouts, or technology investments. 

Given that many dental practices rely on predictable expensing strategies when planning expansions or upgrades, even small changes to these rules can influence cash flow and long-term financial planning. 

IRS Enforcement Priorities Are Expected to Expand 

The IRS has already announced increased attention on high-income individuals, closely held businesses, and entities with complex tax structures. For dental practice owners—particularly those operating as S corporations or partnerships—this means documentation, compliance, and proper classification will be more important than ever. 

Areas likely to receive enhanced scrutiny include: 

• Reasonable compensation for owners 

• Business versus personal expense separation 

• Depreciation accuracy 

• Retirement contributions and fringe benefit plans 

While strong recordkeeping and clean books are always essential, 2026 may bring a noticeable increase in compliance demands. 

Contribution Limits and Depreciation Rules May Shift 

Another area dentists should watch involves potential updates to contribution limits for retirement plans. Many practice owners maximize contributions to 401(k)s, cash balance plans, or profit-sharing plans as part of their tax strategy. Any adjustments to these limits—up or down—could affect both personal retirement planning and tax liability. 

Depreciation rules may also be adjusted as bonus depreciation continues to phase down. Dental practices that rely on periodic equipment upgrades, operatory improvements, and technology purchases will want to understand how these shifts could influence deductions over the next several years. 

Why Proactive Planning Matters Now 

For dental practice owners, tax changes are not just a year-end issue—they affect the daily financial decisions that drive profitability. Early planning allows dentists to evaluate investment timing, understand how policy shifts may impact their practice’s financial position, and adjust strategies well before deadlines arrive. DrillDown Solution is committed to helping practice owners stay informed and prepared as 2026 approaches, providing the clarity and perspective needed to navigate evolving regulations with confidence and protect the long-term financial health of their practices.