Back to Cover Page

Dentistry’s Special Tax Break

Purchasing new equipment to improve the overall performance of your practice: good. Uncle Sam picking up a third of the tab: even better.

WHEN IT COMES TO TAXES, one thing is beyond dispute: Everyone, regardless of political beliefs or economic status, hates writing that annual check to the Internal Revenue Service.

Isn’t it nice to know, then, that dentists get their own tax break?

Well, sort of. Section 179, named for the relevant portion of the IRS tax code, allows for the immediate deduction of up to $510,000 in capital equipment every year. You couldn’t have designed a better tax incentive for dentists.

It gets better, too: Under Section 179, every small business, dental practices very much included, can carry forward any unused deduction. (Always consult a tax professional before you make any tax decisions or deductions, of course.) In other words: If you can’t use the entire amount of the deduction in a given year, you can apply it to your tax bill the next year.

The net impact: Depending on their federal tax rate, most dentists can subtract from their annual tax remittance about a third of any equipment they buy directly. It’s as if the U.S. government is paying a portion of the purchase price.

Originally designed as a temporary incentive to spur small businesses to invest, Section 179 was held hostage for many years by Congress, which was reluctant to make it permanent. In past years, the deduction wasn’t even renewed until December, making it nearly impossible for companies to plan around it. (This sense of confusion, which prevailed for over a decade, is probably what has led most dentists and their accountants to forget about the significant impact Section 179 can have on a dental practice.)

Dentistry is in the midst of a tech revolution — and the government has graciously offered to help subsidize it.

In December 2015, however, D.C. enacted legislation that locked Section 179 into the tax code. The carve-out is perfect for small companies that consistently make money and are looking for opportunities to invest in equipment that improves their business. Fortunately, dentistry checks the box on both.

Our entire industry is in the midst of a technological revolution, and the federal government has graciously offered to help subsidize it. Take a few minutes to talk with your Friendly Benco Rep, as well as your tax adviser, about how best to maximize the Section 179 deduction to benefit your practice.

This issue of Incisal Edge features plenty of information about cuttingedge technology that will improve your efficiency and patient outcomes, as well as profiles of young dentists from around the country who are embracing these new tools: our annual 40 Under 40.

As always, please reach out anytime with questions, ideas or suggestions.