Year-End Tax Planning for Dentists: What to Ask Before Dec 31

Eight weeks are left in 2026. Four year-end tax levers for dental practice owners, how each one touches the rest of your plan, and the questions to bring your CPA.

By Tim McNeely, CFP®, CIMA®, CEPA®, CPFA® | LifeStone

Dec 31 is about eight weeks away.

I help dental owners look at the levers they can still pull before they sell. Four of them close at year-end.

Some of your 2026 tax picture can still change. After that, it's set.

Here is the short answer. Four levers matter most before year-end: your S corp salary, equipment timing, income and expense timing, and retirement contributions. Each one touches the rest of your plan. Talk them through with your CPA before your last payroll of the year.

This post gives you the questions to bring to that meeting. Not the answers.

Coordination is the lever

Your CPA sees your return. Your advisor sees your accounts. Your attorney sees your entity. Often, nobody sees all three at once.

Year-end is when that shows up. A move that lowers this year's tax can raise next year's. It can tighten your cash. It can change what a buyer sees in your books if a sale is a few years out.

So the question is never only "Will this lower my tax?"

It is "What does this do to the rest of my plan?"

Lever 1: Your S corp salary

If your practice is an S corporation, the IRS says you must pay yourself reasonable compensation before you take non-wage distributions. The IRS lists factors such as your training, your duties, the time you put in, and what comparable businesses pay. It does not publish one formula.

Your salary runs through payroll. So the window closes with your last payroll run of the year.

Ask your CPA:

  • Is my salary reasonable for the work I actually do?
  • If it should change, can we still change it this year?
  • How does my salary affect what I can put into my retirement plan?

Lever 2: Equipment timing

The One, Big, Beautiful Bill made the 100% additional first year depreciation deduction, often called bonus depreciation, permanent for eligible property acquired after Jan 19, 2025. The IRS issued guidance on it in January 2026.

That makes a new scanner or chair tempting in December.

Buy it because your practice needs it. Not because of the deduction. A deduction on something you didn't need is still money spent.

Ask your CPA:

  • Does this purchase qualify, and when does it need to be in service?
  • Should we take the full deduction this year, or spread it out?
  • If I might sell in the next few years, how does a large deduction now show up at the sale?

Lever 3: Income and expense timing

Some owners pull expenses into December. Some push deposits into January.

Both move tax from one year to another. Neither makes it disappear.

Timing helps most when next year will look different from this one. A bigger year. A smaller year. A sale. A move to another state.

Ask your CPA:

  • Are we on cash or accrual, and what can we actually move?
  • Do I expect next year's income to be higher or lower?
  • Will moving income or expenses squeeze my cash in January?

Lever 4: Retirement contributions

For 2026, the IRS limit on 401(k) employee deferrals is $24,500. If you are 50 or older, the general catch-up is $8,000. If you are 60, 61, 62 or 63, a higher catch-up of $11,250 applies instead.

What you can still do depends on your plan type and your plan document.

Ask your CPA and your plan administrator:

  • Which of my contributions must run through payroll by Dec 31?
  • Which can I still make after year-end for 2026?
  • Is my plan still the right plan for me and my team?

One more 2026 change

For 2026, the federal deduction for state and local taxes is capped at $40,400 ($20,200 if married filing separately). The cap is reduced if your modified adjusted gross income is over $505,000 ($252,500 if married filing separately). It does not drop below $10,000 ($5,000 if married filing separately).

Ask your CPA:

  • Am I above the line, and by how much?
  • Does the cap change the value of paying any state or property taxes before Dec 31?

Slow down on the pitch

Every fall, someone pitches a shelter with a big promise.

If the pitch leads with the deduction, slow down. Ask what happens if the IRS disagrees. Bring it to your CPA first.

Four levers, one plan

Your salary shapes your retirement plan. Your equipment shapes your cash. Your timing shapes next year. All of it shows up if you sell.

Sit down with your CPA before mid-December. Bring this list. For every move, ask what it does to the other three.

You decide what your year-end looks like. Not the calendar.

If a sale is on your horizon, the Exploratory Call is where we look at how these four fit your exit.

Book your 25-minute Exploratory Call

Which of the four levers have you not talked about with your CPA yet?

Sources

This article is for educational purposes only and is not tax, legal, or investment advice. Consult your own qualified professionals about your situation.