Tax is probably your biggest expense. Not your team. Not your rent. Add up federal tax, state tax and payroll tax, and for most dental practice owners it is the largest check they write every year.
This guide explains tax planning for dentists in plain language: what it is, the eight levers that matter most, and what to do each quarter. I wrote it for US dentists who own, or plan to own, a practice.
What is tax planning for dentists?
Tax planning means making decisions during the year that legally lower the tax you owe. Tax preparation is different. Preparation records what already happened and files it on time. Think of it as historians versus visionaries. Your accountant can be a very good historian and still never plan anything.
Most of the savings are found before December 31, not on filing day. Once the year is over, most options are gone.
Why dentists overpay
- Nobody planned. The return is prepared once a year and no one asks what could have been done earlier.
- General accountants. A generalist does not know what a dental practice can legally do. In my practice’s experience, most returns we look at show room to lower the tax burden.
- Fear. Dentists are rarely too aggressive. More often they are too scared to take deductions they are entitled to.
- Busy. You are treating patients. Tax gets the leftover hour.
The eight levers of tax planning for dentists
1. Entity structure
Whether your practice is a sole proprietorship, an LLC, an S corporation or a C corporation changes how much tax you pay and how. A wrong structure is one of the most common reasons for overpaying. Read how the right entity structure boosts tax savings.
2. Owner pay: salary versus distributions
If you run an S corporation, the IRS expects a reasonable salary. Too low invites trouble, too high wastes payroll tax. See W-2 salary versus S corp distributions.
3. Retirement plan design
A well-chosen plan is one of the largest legal tax deductions available to an owner. The right plan depends on your income, your age and your team. Compare options in retirement planning for dentists.
4. Equipment and depreciation timing
The 2025 tax law expanded first-year write-offs for qualifying equipment, and the rules are detailed. My view: never buy equipment only for the deduction. A deduction returns part of what you spent. Plan purchases you need anyway, and time them well. See timing equipment purchases.
5. Vehicle and home office
Both are legal when set up right and well documented, and both are audit targets when they are not. Take a look at vehicle deductions and the home office deduction.
6. Family on payroll, for real work
Paying a spouse or children for real work in the practice can shift income legally. The work must be real, the pay reasonable and the records complete. See hiring your kids.
7. The qualified business income deduction
Many pass-through owners can deduct up to 20% of qualified business income. The 2025 tax law made it permanent, but limits and salary rules still apply. Read the dentist guide to the QBI deduction.
8. Buying or selling a practice
How a purchase price is split, especially goodwill, changes your deductions for years. Plan the tax before you sign the letter of intent, not after the money lands.
A simple tax planning calendar
- Q1. Get last year’s return and numbers looked at. Set this year’s plan. Fund last year’s retirement contribution if the rules allow.
- Q2. Check year-to-date profit against the plan. Adjust your estimated payments.
- Q3. Decide on equipment, hiring and retirement plan changes with time to implement.
- Q4. Final check of salary, distributions and purchases before December 31.
Monthly books make all of this possible. If your numbers are not current, start with the basics in our guide to a proper chart of accounts and dental practice overhead.
Common mistakes
- Waiting until filing season to think about tax.
- Choosing an entity once and never checking it again.
- Paying yourself too little, or with no clear salary.
- Buying equipment just for the deduction.
- Mixing personal and practice spending.
- Taking an advisor’s word on a promised credit with no documentation. See why R&D credit pitches need caution.
Frequently asked questions
How much can a dentist save with tax planning?
It depends on your income, entity and plans. I do not promise a number. Many dentists I work with find that a plan changes their tax result in a meaningful way, and that is why I look at each return from scratch.
When should a dentist start tax planning?
Now. The best time is early in the year, but a plan made in the fall still has real options before December 31.
Is tax planning different from tax preparation?
Yes. Preparation reports what happened. Planning changes what happens next.
Should I get a second opinion on my tax return?
Yes. You get a second opinion on a treatment plan. A tax return deserves the same. Read about getting a second opinion.
The next step
Send your last tax return to someone who did not prepare it. We offer a free analysis in two one-hour meetings: first I ask questions to understand the story behind your numbers, then I show what I found. No pressure, and your current accountant does not need to know. You can only amend three years back, so do it now.
Ask for a free tax return analysis.
This guide is general education for US dental practice owners. It is not tax advice for your situation. Tax rules change, so confirm details with your own advisor.
