Understanding Depreciation: A Simple Guide for Dentists

Aug 25
2 min read

Buying new dental chairs, imaging devices, and technology is an investment in your practice and your patients. But many dentists overlook how these purchases can lower their tax bills through depreciation, missing out on valuable deductions each year. At ISTAXPro, we provide accurate bookkeeping and tax return preparation for dentists, ensuring your equipment purchases are tracked correctly so you capture every eligible deduction while staying compliant.

What Is Depreciation?

Depreciation allows you to deduct the cost of qualifying equipment over time as it is used in your practice, reducing your taxable income each year.

Rather than taking the full deduction in one year, you typically spread the deduction over the useful life of the equipment (5–7 years for many dental items). However, special provisions like Section 179 and bonus depreciation may allow you to deduct more in the year you purchase the equipment.

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Types of Depreciation Dentists Should Know

1. Section 179 Deduction

This allows you to deduct the full purchase price of qualifying equipment in the year it is placed in service, up to the annual limit ($1.22 million for 2025, subject to phase-outs for larger purchases).

Key requirements:

● Equipment must be purchased and operational before December 31

● Limited by your taxable income for the year

2. Bonus Depreciation

Bonus depreciation currently allows for 100 percent immediate expensing of qualifying new and used equipment purchases in the year placed in service.

It can be used after Section 179 limits are reached and can create or increase a business loss, which may help offset other income.

3. Regular (MACRS) Depreciation

If you do not use Section 179 or bonus depreciation, your equipment is depreciated over several years using the Modified Accelerated Cost Recovery System (MACRS).

This method spreads deductions over the equipment’s useful life, providing smaller annual deductions.

Why Depreciation Matters for Your Practice

● Lowers taxable income, reducing your tax liability and improving cash flow

● Supports investment in your practice by allowing you to upgrade technology and patient care while managing costs

● Maximizes tax efficiency by aligning equipment purchases with your income and tax planning strategy

Common Mistakes Dentists Make with Depreciation

● Failing to track purchase dates and when equipment is placed in service

● Not retaining invoices and payment documentation

● Missing Section 179 or bonus depreciation opportunities due to poor record-keeping

● Confusing supplies, which are deductible immediately, with depreciable equipment. Clean, organized books ensure you capture eligible deductions and maintain compliance.

How ISTAXPro Supports Dentists

At ISTAXPro, we help you:

● Track your equipment purchases accurately in QuickBooks

● Determine the best depreciation strategy for your practice

● Capture and apply deductions correctly on your tax return

● Maintain audit-ready records to protect your practice

Invest in Your Practice While Saving on Taxes

Depreciation is a powerful tool to lower your tax burden while investing in your practice’s growth and patient care.

Taxes: Due Date Extension