Dental practices replace imaging systems, chairs, sterilization equipment, CAD/CAM units, and practice software on a regular cycle, and each purchase is substantial. Federal tax law currently allows most of that equipment to be deducted in the year it is placed in service rather than over five or seven years. The figures below apply to the 2026 tax year.
Section 179 expensing
Section 179 allows a business to elect to deduct the cost of qualifying equipment in the year it is placed in service. For 2026, the maximum deduction is $2,560,000, and it is reduced dollar for dollar once a business places more than $4,090,000 of qualifying property in service during the year. Few dental practices approach either limit.
The more relevant restriction for a practice is that the Section 179 deduction cannot exceed the business's taxable income for the year. Any amount above that is carried forward. Section 179 also applies to used equipment, provided it is not acquired from a related party.
Bonus depreciation
Bonus depreciation, under Section 168(k), allows an immediate deduction of a percentage of the cost of qualifying property. Legislation enacted in July 2025 restored a 100 percent rate for property acquired after January 19, 2025, and made it permanent. Unlike Section 179, bonus depreciation is not limited by taxable income and can create a loss. It applies automatically unless the practice elects out, by class of property, on its return.
The equipment must be in service
Both deductions depend on the date the equipment is placed in service, meaning installed and ready for use in the practice. A unit ordered in December and installed in January is a deduction for the following year. Financing does not affect eligibility. Equipment purchased with a loan or an equipment finance agreement can be deducted in full in the year it is placed in service, even though most of the payments occur later.
Deducting now is not always the right choice
An immediate deduction is most valuable when the practice's income is high in the current year. For a newly purchased or newly opened practice with modest first-year income, a large deduction may produce little benefit now and leave less depreciation for later years when income, and the tax rate that applies to it, is higher. For a practice that expects to sell within a few years, a related point is that depreciation previously deducted is generally recaptured as ordinary income on the sale. For an S corporation, the deduction passes through to the owner and is usable only to the extent of the owner's basis in the company.
State rules may differ
This post describes federal treatment only. Each state sets its own depreciation rules, and many states do not follow federal bonus depreciation or the full federal Section 179 limits, so the deduction on a state return may differ from the federal figure.
This is general information rather than advice for a specific practice, and the right choice depends on the practice's income, entity, and plans. Our dental practice page describes how we approach tax planning for dentists.
This post is general information, not specific tax, accounting, or legal advice. Your situation may differ, so talk to us before acting on anything here.