If you want an honest answer, yes, you can usually find tax savings right now as a dental practice owner, not months from now. Some of the best Immediate tax savings for dental practice owners come from simple changes you can make this year: adjusting how you pay yourself, timing equipment purchases, cleaning up how you track expenses, and using your entity structure correctly. None of this is magic. But if your income is high and your tax planning is weak or rushed, the dollar impact can be very real, very fast.
Start with one question: where is your money actually going?
Most dentists I have spoken with know roughly what they make in a year, but not how much they truly keep after taxes. They might know their top line, and maybe their practice overhead, but taxes sit in some blurry category of “a lot” that the CPA just handles.
If you want immediate savings, that vague picture has to tighten up a bit.
Ask yourself:
- How much did I pay in federal and state income tax last year?
- How much did my practice pay in payroll tax?
- How much did I pay in quarterly estimates?
- How much did I pay in personal property or local business tax?
Most owners cannot answer all of that without digging. That is not a moral failure, but it is a tax problem. Because if you do not know what you paid, it is hard to know where the leaks are.
Tax savings usually start with clarity. If you cannot see the problem on one sheet of paper, you will struggle to fix it this year, or any year.
So, first move: pull your last filed return and your year-to-date profit and loss. One practice, one year. Keep it concrete.
Quick diagnostic: are you overpaying right now?
Here is a simple test. If any of these sound like you, there is probably room for immediate savings:
- You are a solo dentist filing as a Schedule C sole proprietor with more than 200k in net profit.
- Your practice is an S Corp, but you take almost everything as W-2 salary.
- You buy equipment and just let your CPA “handle the depreciation” with no planning.
- You have no retirement plan beyond maybe a small IRA.
- Your bookkeeping is behind, so tax planning always happens at the last minute.
If at least one of those is true, it is not about “being bad with money.” It just means the structure around your practice is not really designed for tax control. That is actually good news, because structure can change.
Entity structure: the fastest fix for many dentists
This is where things get touchy. A lot of dentists were set up as an S Corp because someone said, “You will save on self-employment tax.” Or they stayed as a sole proprietor because “it is simple.” Both reasons are half-true, which is the worst kind of advice.
When an S Corp really starts saving money
The tax edge of an S Corp comes when your net profit gets high enough that splitting your income into W-2 wages and S Corp distributions cuts payroll tax without upsetting the IRS. That balance matters.
Very rough rule, not perfect:
- Under 150k net profit: tax savings from an S Corp might be small or wiped out by admin costs.
- 150k to 500k net profit: usually the sweet spot if your salary is set with some care.
- Over 500k: planning gets more complex, but the upside grows if done well.
The mistake many dentists make is either:
- Setting salary too high, which kills the payroll tax benefit, or
- Setting salary too low, which draws IRS attention if they ever look closely.
Is there a magical formula? No. Anyone promising that is selling a shortcut. But you can often do this:
Start with what another dentist would reasonably earn as an associate doing your level of production, then adjust with your CPA based on your exact role and hours.
Here is a very simple example just to see the mechanics.
| Schedule C Dentist | S Corp Dentist | |
|---|---|---|
| Net profit before owner pay | 350,000 | 350,000 |
| Owner W-2 salary | N/A | 200,000 |
| Distributions to owner | N/A | 150,000 |
| Income subject to payroll/self-employment tax | 350,000 | 200,000 |
The gap between 350k and 200k is where self-employment or payroll tax savings can show up. It is not always a perfect number, and there are ceilings on Social Security, but this is the general idea. You trade some complexity and payroll work for tax savings on that slice of income.
If you are already an S Corp and still paying a lot, your salary vs distribution mix may simply be off. That is something that can be adjusted mid-year or at least before year end.
If you are still a sole proprietor or basic LLC
If your net profit is moving past 180k or 200k and you file on Schedule C, it is worth asking very directly: “Does it make sense to elect S Corp status for this year?” The answer is not always yes, and sometimes you are too late for the current year, but people are often surprised how much is still possible if you act before the year closes.
There are deadlines and some retroactive options, but those get pretty technical. The key thing is timing. Waiting until tax season to talk about last year is almost always the most expensive version of this conversation.
Clean up your bookkeeping for real-time decisions
This is not glamorous. Nobody opens a practice because they love reconciliations. But if your numbers are months behind, you will miss chances for immediate savings.
You cannot time a big equipment purchase, adjust salary, or decide on a retirement plan contribution if you do not have a clear profit number.
Real tax planning for this year needs this year’s numbers, not last year’s memories.
If your books are a mess, consider one simple goal: bring them current through last month and keep them current every month going forward. Not “perfect forever,” just “accurate enough to plan” on a monthly basis.
That alone opens up options like:
- Making a larger safe retirement plan contribution with confidence.
- Pulling the trigger on equipment at the right time instead of guessing.
- Adjusting estimated tax payments if you are overpaying.
Section 179 and bonus depreciation for equipment
Dental practices buy a lot of equipment. Chairs, digital scanners, cone beam units, practice management systems, computers, buildouts. The tax code actually favors this kind of investment if you use the rules well.
Expensing equipment vs spreading it over years
When you buy qualifying equipment, you often have three broad paths:
- Expense most or all of it this year using Section 179.
- Use bonus depreciation for a large first-year deduction.
- Depreciate it over its normal life (for example 5 or 7 years).
Many dentists just hear “We will write it off” and stop asking questions. But the timing of that write off really matters. You can often decide, late in the year, how aggressive you want to be.
Why might you want a big deduction now?
- Your income is unusually high this year and you expect it to drop next year.
- You are trying to keep your taxable income below a certain bracket.
- You want to reduce this years quarterly estimates or final balance due.
Why might you not want to accelerate everything?
- You already have a very low taxable income this year.
- You expect next year to be much higher, so you want deductions later.
- You want more stable, predictable deductions year to year.
Here is a quick comparison just to visualize the tradeoff.
| Scenario | Year 1 deduction on 200k equipment | Future year deductions |
|---|---|---|
| Full Section 179 | 200,000 | 0 |
| Straight-line 5-year | 40,000 | 40,000 each year for 4 more years |
These numbers ignore bonus rules and limits, but the pattern is the point. You either pull forward deductions or spread them out. With some planning before year end, you can match that pattern to your income curve.
Retirement plans that actually move your tax bill
For a W-2 employee, a 401(k) feels like a nice add-on. For a dental practice owner, a well-designed retirement plan can be a major tax lever, especially at higher income levels.
Basic solo or small-practice options
The common paths you hear about are:
- SEP IRA
- Simple IRA
- 401(k) or solo 401(k)
- Cash balance plan layered on top of a 401(k)
Where dentists sometimes go wrong is picking a plan years ago and never revisiting it as their profit and staff mix changed. A Simple IRA might have made sense when you were starting with low profit and a small team. That same structure can be limiting now.
Very roughly:
- If you have high profit and few or no staff, a solo 401(k) or SEP can open higher owner contributions.
- If you have a team and want both owner and staff benefits, a 401(k) with profit sharing is common.
- If your income is very high and you are 40s or 50s, cash balance plans can drive large pre-tax contributions.
Again, this is not magic. Pre-tax contributions reduce current taxable income, but the money is not gone, it is just moved into a retirement bucket. You are trading current tax for later tax, usually at a hopefully lower rate. If your current brackets are painful, that trade can feel very worth it.
How this impacts your tax bill now
Here is a very simple example just to show the math flavor.
| No plan change | New 401(k) + profit sharing | |
|---|---|---|
| Practice profit before contributions | 500,000 | 500,000 |
| Total owner retirement contribution | 6,500 (IRA) | 60,000 (401(k) + profit share) |
| Taxable income reduction vs no plan | 6,500 | 60,000 |
Assume combined federal and state rate of 35 percent on that slice. The simple IRA structure might save a bit over 2,000 in tax. The 401(k) structure might save around 21,000 in current tax. Big difference, same person.
Of course, this is not free. Staff contributions, admin costs, and testing rules matter. This is why you cannot just grab some template plan from a random provider and assume it is tailored to you.
Changing how you pay yourself
If you are an S Corp owner, your W-2 salary vs distribution mix is one of your main levers. For many dentists, salary was set years ago and never reviewed. Practice has grown, but payroll has not been revisited.
This is where you might push back and say, “I do not want to mess with this and risk a problem with the IRS.” That is fair. Blindly cutting salary to chase a few thousand in payroll tax can be a bad move.
A more grounded approach is:
- Figure out what your total owner cash need is for this year.
- Estimate what a reasonable salary would be for your actual clinical and management role.
- Set salary at that level, not based on what your friend does.
- Take the rest as distributions.
If you are currently paying yourself 100 percent through W-2 out of fear, you are probably leaving payroll tax savings on the table. If you are paying yourself a very low salary while pulling huge distributions, you might be leaning too far the other way.
Legit business expenses you might be missing
I am not talking about forcing personal stuff through the practice. That is how people get into trouble. But many owners still miss plain, legitimate deductions because “it is just how we do things” at home or in the office.
Home office, carefully done
Some dentists refuse to claim home office because they still remember old horror stories. The rules changed a long time ago. If you run a real admin space at home for your practice, and your practice office is not where you do substantial admin work, you may have a valid home office deduction.
This can open up part of your home utilities, internet, and other costs as business expenses. The key is to follow the rules, document the space, and not stretch the definition just to shave a few dollars off.
Education and professional development
CE, courses, travel linked to CE, memberships, and subscriptions are often undercounted. Sometimes they sit on personal cards and never get moved into the books. Other times the receipts are missing and nobody wants to dig around.
Simple fix: set a habit that any CE or professional cost goes on a business card, not a personal one. That way it hits the books automatically and you get the deduction without extra effort.
Family on payroll
This is sensitive and easy to abuse, but it can be legitimate. If a spouse or teenage child actually works in the office or on real admin tasks, paying them as employees can shift income and create new retirement or tax planning options.
The risk is paying a family member for pretend work. That is not planning, that is asking for trouble. But if the work is real, the pay is reasonable, and the documentation exists, the IRS does not ban this concept.
If you would not pay a stranger the same amount for the same task, the family pay is probably too high.
Quarterly estimates and timing moves this year
One of the fastest ways to feel relief is not a deduction at all. It is realizing that your estimated payments are far too high and can be safely reduced.
If you set estimates based on last year and your profit has dropped, you may be sitting on unnecessary overpayment. With current books, you can often adjust estimates and keep more cash in the practice or your pocket now.
On the flip side, if your year is trending much higher, you can use the last quarters estimate to knock down the final surprise bill. That is not fun, but it is better than facing a huge balance with no planning time left.
Year-end “levers” you can still pull
If you catch things early enough before year end, you still have choices such as:
- Accelerating planned equipment purchases or buildout work.
- Delaying certain income if cash basis and timing allows.
- Adjusting retirement plan contributions upward.
- Fine-tuning your W-2 salary for the year if you are an S Corp owner.
None of these should be done blindly just to “pay less tax.” A rushed equipment buy that your practice does not need is not smart, even if the deduction looks nice. You want moves that make sense for both your clinical goals and your numbers.
Dental-specific issues many generic tax plans miss
Not all professional practices behave the same for tax purposes. Dental practices have some quirks.
High staff costs and benefits
Dentistry is labor heavy. Hygienists, assistants, front office, managers. Payroll and benefits can be over 25 to 30 percent of collections, sometimes more. That means credits or deductions tied to payroll can matter a lot.
Things to watch:
- Credits for certain types of paid leave in limited years.
- Health insurance structures and how they run through the S Corp.
- Retirement plan design that does not overburden the owner.
Even something as simple as how your health insurance is reported on W-2 if you are an S Corp owner can impact where and how you get the deduction.
Multiple locations and entities
If you own more than one practice, or share space, or have a management company setup, the entity web can get messy. That mess is often where both risks and savings hide.
You might have:
- One entity owning equipment, another running the clinical side.
- Real estate held in a separate LLC and rented to the practice.
- Partnerships with other dentists in some locations but not others.
Each structure choice has tax effects on rent, interest, depreciation, and flow-through income. If no one has ever sat down and mapped all entities on a single page, you are probably missing something, good or bad.
Common bad ideas you should avoid
I think it is fair to say that tax talk with other dentists, or in random online groups, can drift into strange territory. A few patterns come up often.
“Just write everything off”
This is not planning. Buying things you do not need to save on tax is like throwing away a dollar to keep 30 cents. The math is simple and not in your favor.
If someone suggests forcing personal vacations, home remodeling, or random luxury purchases through the practice, you are not saving tax. You are risking penalties and adding stress.
Copying your friends entity and salary without context
Two dentists can have the same gross collections and still need different structures. One might have high overhead, a big loan, and a large family. The other may have low overhead, no debt, and different goals.
Matching their S Corp salary or retirement plan just because it “worked for them” is not really logical. You need numbers that reflect your reality, not anyone elses.
Waiting for tax season to “see how it looks”
This might be the most expensive habit. By the time the return is prepared, last year is locked in. You can only report what happened.
If you want immediate savings, your mindset has to shift from “reporting” to “directing.” That means touching your numbers during the year, not after.
How to approach this without getting overwhelmed
This all might feel like a lot. Production, staff drama, patient flow, now you also need to think about tax levers. It can feel easier to say, “I will just pay what I owe and move on.” That is a choice, but it is probably an expensive one as your income grows.
You do not need to become a tax expert. That is not a good use of your brainpower. What you do need is a process that repeats every year.
A simple yearly rhythm that actually works
Many high-earning dentists do well with something like this:
- Q1: Review last years return and entity structure. Ask “Did this setup work, or should we change something this year?”
- Q2: Confirm books are current. Update projections and adjust salary, estimates, or retirement plan targets.
- Q3: Early check for big decisions. If you are thinking of a major equipment buy or a new location, model the tax impact.
- Q4: Final planning session. Lock in contributions, plan timing of buys, check S Corp salary levels, and refine estimates.
This is not glamorous, but it shifts you from “reactive” to “deliberate” without turning your life into an accounting class.
Short Q&A to tie this together
Q: What is the fastest way to reduce my tax bill this year as a dental practice owner?
A: The fastest paths are usually: dialing in your S Corp salary if you have one, maximizing a suitable retirement plan, making smart decisions about equipment expensing, and correcting overpaid estimates. None of that requires a massive overhaul, but it does require current numbers.
Q: I am a Schedule C dentist with around 300k profit. Is staying a sole proprietor a bad idea?
A: It is not automatically “bad,” but at that level it is likely you are missing payroll tax savings that an S Corp could provide. You should run a side by side comparison with someone who understands practice numbers. If no one has shown you that yet, that is a gap, not just a preference.
Q: Are retirement plans really worth it, or am I just locking money away?
A: You are locking money away, but in exchange you are cutting your current taxable income. If your marginal rate is high, the trade can be very strong. For example, moving 50k into a plan might reduce your tax bill by 15k to 20k this year, depending on your brackets. You still own the 50k, it just sits in a different account.
Q: Do I need some complex strategy, or can a few basic changes really matter?
A: For many dentists, a few basic changes matter more than exotic strategies. Clean books, a well chosen entity structure, a properly set salary, and a thoughtful retirement plan can move tens of thousands of dollars per year. Chasing obscure tricks before you fix the basics is backward.
Q: If I do nothing different, what usually happens?
A: You keep working hard, your income grows, and taxes quietly rise with it. You may still do fine, but you are likely giving away money every year that could instead be paying down debt, funding retirement, or supporting your life outside the practice. The tax system is not designed to fix itself for you.