Dental Practice Owners: The 2026 Year-End Tax Review, Step by Step, With Ten Weeks Left

Count the weeks before you count the deductions

Dental practice owners, try this before reading further. Open your calendar and count the weeks between today and December 31. If you are reading this in late October, the answer is about ten. That is a handful of payroll runs, a quarter's worth of collections, and the last window to make decisions that still count on your 2026 return.

Here is the uncomfortable part. If the first time you look at your 2026 numbers is when your return is being prepared, you are not planning your taxes. You are reading their history. A tax historian explains what happened. A tax planner decides what happens next. For dentists, that difference matters more than usual because of one specific rule.

That rule is the phase-out of the 20 percent business income deduction for health fields. Below, in the order our team runs it, is the year-end review that shows where you land and what you can still do about it. This is general education, not advice for your specific situation.

Step 1: Project your 2026 household taxable income

Start with year-to-date practice profit from your books. Add what you realistically expect to collect by December 31, including insurance payments still working through the system. Then subtract the payroll, rent, lab fees and supply orders still to come. Collections in dentistry lag production, so use your actual collection rate, not the production report.

Then widen the lens to the household. Add a spouse's wages, investment income including any gains you have realized, and net rental income. The deduction is tested on your household's taxable income, not the practice's profit alone. A dentist whose practice clears a comfortable amount can still land deep in the phase-out because of a spouse's salary or a property sale. We build this projection with you. What we need from you is current books and a short list of the household's other income.

Step 2: Measure it against the phase-out

In plain English: the business income deduction lets owners of pass-through businesses (sole proprietorships, partnerships and S corporations) deduct up to 20 percent of qualifying business profit. For health fields, and dentistry is one, the deduction itself phases out as income rises.

For 2026 the phase-out starts at $201,750 of taxable income for single filers and $403,500 for married couples filing jointly. It is gone completely at $276,750 for single filers and $553,500 for joint filers. In between, part of it survives, and the further into the range you go, the less you keep.

Here is a worked example. Say a married dentist has $300,000 of qualifying practice profit. The full deduction would be 20 percent of that, or $60,000. At an assumed 32 percent tax rate, that deduction is worth about $19,200 in federal tax. Now suppose the household's projected taxable income is $428,000. That is $24,500 into a phase-out range that is $150,000 wide ($553,500 minus $403,500), or about 16 percent of the way through. In simplified terms, roughly 16 percent of the deduction is lost. The real calculation has more moving parts, which is why we run the actual numbers, but the shape is clear.

Step 3: Decide which moves bring income back toward the line

Retirement contributions are usually the first lever. The 2026 employee 401(k) deferral limit is $24,500, plus a catch-up of $8,000 for owners aged 50 to 59 or 64 and older, or $11,250 for ages 60 to 63. In the example above, a full $24,500 deferral would bring that household from $428,000 to $403,500, right at the start of the phase-out. Employee deferrals generally have to come out of paychecks dated by December 31, so this lever has a real deadline.

Profit sharing can add more on top, within the total annual additions limit of $72,000, or $80,000 with the age-50 catch-up. But a profit-sharing contribution for you has to account for your team: the hygienists, assistants and front desk staff who are eligible under the plan. That is not a reason to skip it, since a good plan helps keep good people. It is a cost that belongs in the model before you decide.

Equipment timing is the second lever. An intraoral scanner, a new operatory chair or a milling unit placed in service by December 31 may be deductible this year rather than over several years. "Placed in service" means installed and ready to use, not just ordered or paid for. Dental equipment lead times can run long, so if a purchase is already planned, confirm delivery and installation dates with your vendor now.

One honest caveat: weigh each move on its own merits, not only to stay under a threshold. A scanner you do not need is not a strategy. It is an expense with a partial refund. Large deductions also shrink the practice profit the 20 percent is calculated on, so the net effect is smaller than it first looks. The right move is the one that still makes sense with the tax piece removed.

Step 4: Put the decisions in writing

A review only helps if decisions get made and acted on. Your Tax & Wealth Plan lists each decision, its deadline and who acts on it: what our team handles, what your office manager or payroll provider needs to change, and what you need to sign. Nothing important depends on someone remembering a conversation in November.

It also matters who is looking. One advisor who is both a CPA and a CFP® professional looks at the practice and the household together. That way the retirement contribution that helps your tax bill also fits your long-term plan, and the equipment purchase fits your cash flow.

The number you can still change

Where your income lands against the phase-out is a number you can see now and still plan around. In January, it becomes a number you can only report.

Some things in a practice year really are unpredictable, like an associate leaving or an insurer cutting reimbursements. Where your income lands against a published threshold is not one of them. That part is not unpredictable. It is just unplanned.

Key takeaways

• The 20 percent business income deduction phases out for health fields, and dentistry is one of them.
• For 2026 the phase-out runs from $403,500 to $553,500 of taxable income for joint filers, and from $201,750 to $276,750 for single filers.
• The test uses household taxable income, so a spouse's wages, investments and rentals all count.
• Retirement deferrals and equipment placed in service by December 31 can move the number, but each should make sense on its own.
• Write every decision down with a deadline and an owner so it actually happens before the year closes.

Let's run it before the year closes. Book a year-end review with Eiduk Tax & Wealth. Our team will project your 2026 household income, show where it lands against the phase-out, and turn the moves worth making into a written plan with dates and owners. Pay Less. Keep More. Build Wealth.