November 25, 2025

The start of a new year is a great opportunity to look over your payroll process and make improvements.

In a private dental practice, payroll is more than just paying employees on time; it also involves managing employee benefits and ensuring compliance with relevant regulations. It affects team morale, controls costs, supports retirement savings, and maintains compliance. Even a small mistake can lead to penalties or unhappy staff.

This updated 2026 checklist will help you improve your payroll so it supports your team and your financial goals this year.

1. Refresh Employee Information and Roles

Accurate employee information is key to a smooth payroll.

Before you process your first payroll in 2026, take a moment to review:

Employee records and demographics.

Confirm that every team member’s legal name, address, Social Security number, and date of birth are correct and match their Form W-4. If you have remote team members or out-of-state billers, ensure their work location and state are accurately coded in your payroll system.

Terminated employees.

Take former employees out of your active payroll and benefits systems so they don’t get paid or receive benefits by mistake. Ensure that all final paychecks, including any required PTO payouts, have been issued and accurately recorded.

Access and security.

Check that only the right people, usually the owner, practice manager, and maybe one trusted administrator, have access to your payroll system. Remove access for any former office managers or outside vendors you no longer use.

Dental-specific job classifications.

Make sure titles and department codes are up to date and meaningful, for example:

• Owner-dentist / associate dentist.
  
  
• Hygienist (RDH).
  
  
• Dental assistant (RDA).
  
  
• Treatment coordinator/scheduler.
  
  
• Financial coordinator/insurance.
  
  
• Practice manager.

Clear job classifications enable you to analyze hygiene pay as a percentage of hygiene production, track assistant staffing costs for each operatory, and provide your CPA with accurate information.

With the new year comes new limits. In 2026, federal and retirement plan thresholds will have changed, which is especially important for high-earning roles like associate dentists and practice owners.

Social Security and Medicare (FICA)

For 2026:

• Social Security wage base increases to $184,500. Wages up to this amount are subject to the 6.2% Social Security tax for both employee and employer.
  
  
• The Medicare tax remains 1.45% on all covered earnings for both employees and employers.
  
  
• An additional 0.9% Medicare surtax still applies to employee wages exceeding $200,000 (the employer does not match this).
  
  

In many private practices, owner-dentists and some associates will reach the Social Security wage base during the year. Make sure your payroll system automatically stops Social Security withholding once an employee’s year-to-date wages reach $184,500, but continues Medicare withholding on all wages.

Texas Unemployment (TWC)

For Texas practices, the taxable wage base for state unemployment (SUTA/UI) remains $9,000 per employee, per year.

At the beginning of the year:

• Locate your 2026 Texas Workforce Commission (TWC) tax rate notice and update the rate in your payroll system.
  
  
• If you’ve had more turnover than usual, like several assistants or hygienists in the same role, your experience rate may have gone up. Knowing this number can help you make better hiring and retention decisions.

If you have team members in other states (remote billing, call center, or a satellite practice), confirm the state unemployment wage bases and rates separately.

Retirement Plan Limits (401(k), SIMPLE, etc.)

If your practice has a 401(k) or similar plan, update your 2026 contribution limits. This helps prevent excess deferrals.

For 2026, the IRS has announced these key limits for 401(k)plans:

• Elective deferral limit: $24,500 (up from $23,500 in 2025).
  
  
• Age 50+ Catch-up contribution: $8,000 (up from $7,500 in 2025).
  
  
• Age 60–63 Super catch-up: $11,250 (unchanged from 2025).
  
  

Action items for your practice:

• Verify that the payroll deduction codes for employee deferrals and employer matches align with your plan document and the 2026 limits.
  
  
• Review your 2025 year-end reports to identify employees who are close to the maximum, such as the owner-dentist, associate doctors, and long-time practice managers. Make sure their deferral percentages won’t go over the limit in 2026.
  
  
• Confirm that deferrals are being deposited to the plan on a timely basis after each payroll.

Section 125 (Cafeteria) and Other Pre-Tax Benefits

If you offer a Section 125 cafeteria plan (for example, pre-tax health insurance premiums or FSA), verify that:

• Elections for 2026 align with the employee selections made during the open enrollment period.
  
  
• Any FSA carryovers or grace periods are correctly reflected in your payroll deductions.
  
  
• Deductions are coded correctly as pre-tax or after-tax based on both your plan document and IRS rules.

Also, check any other regular benefit deductions, such as dental or vision plans, disability, or supplemental life insurance, to ensure they match your current premiums and carrier bills.

Private dental practices face a higher risk of worker classification issues, particularly with regard to the compensation of associate dentists and hygienists.

At the start of 2026, review each person who works for your practice and ask: Is this person an employee or an independent contractor?

Pay extra attention to:

• Associate dentists paid on production or collections. If they work on your schedule, in your facility, using your staff and equipment, they are usually employees, even if they are paid a percentage of production or collections.
  
  
• Hygienists “on 1099.” Hygienists who work regular days in your office, under your clinical protocols, are very often employees, not contractors.
  
  
• Assistants who “float” only for your practice. If they are using your schedule, supplies, and team, they are usually employees as well.

Getting worker classification right now helps you avoid back taxes, penalties, and reclassification problems later. It also keeps your payroll, benefits, and HR records in order.

Dental practices often use pay models that are more complicated than just an hourly rate.

Early in the year, verify that your payroll system properly handles:

Production or collection-based pay.

• For associate dentists, confirm whether their contract is based on production, collections, or a hybrid model, and ensure the “draw vs. reconciliation” mechanics are clearly mapped to payroll.
  
  
• For hygienists paid on a base plus production model, confirm how and when production bonuses are calculated and paid, and make sure those bonuses are clearly itemized on pay stubs.

Differentials and special pay.

• Hygiene or assistant differentials for Saturdays, evenings, or emergency call-backs.
  
  
• On-call pay for associates covering emergencies.
  
  
• Stipends for lead assistant, lead hygienist, or training responsibilities.

Ensure that all these pay items are set up consistently, taxed correctly as wages, and clearly labeled so that employees understand how they are paid.

Overtime compliance.

Front office assistants, dental assistants, and hygienists are typically non-exempt employees and may be eligible for overtime pay.

Check that:

• Your time-keeping system accurately captures & reports all hours worked, including huddle time, chart review, and cleanup time.
  
  
• Overtime is calculated correctly based on the regular rate (which may include certain bonuses).
  
  

Dental practices often have many extra payroll items, like holiday bonuses, CE reimbursements, license fees, scrub allowances, and more.

Clean these up at the start of the year:

Bonuses and incentives.

• Decide when you will pay production or collection bonuses, hygiene incentives, and team-wide bonuses (monthly, quarterly, annually).
  
  
• Mark those dates on your 2026 payroll calendar and confirm how they will be taxed and reported through payroll.

CE, license, and membership costs.

• Track CE reimbursements, state license renewals, DEA fees, and professional memberships (ADA, TDA, local dental society) through a consistent process.
  
  
• Decide which items are payroll-taxable benefits versus reimbursements under an accountable plan, and set up the correct codes in your system.

Uniforms, scrubs, and allowances.

• If you provide scrubs or a uniform allowance, ensure you have a clear policy and that payroll handles it correctly, either as reimbursement or a taxable allowance, depending on your policy.
  
  

Before your first 2026 payroll:

• Choose your pay frequency: weekly, biweekly, or ideally, semimonthly, and stick with it throughout the year unless you have a compelling reason to change.
  
  
• Review the 2026 calendar to flag any pay dates that fall on weekends or federal holidays (New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving, Christmas, etc.).
  
  
• Decide in advance how you will shift those pay runs.
  
  
  • The common approach:
    
    

• • • If payday falls on Saturday, move it to the prior Friday.
      
      
    • If payday falls on Sunday or a holiday, move it to the preceding business day.
      
      

Once you finalize the schedule:

• Publish a simple one-page payroll calendar for your team (post it in the breakroom and upload it to your HR or payroll portal).
  
  
• Confirm that your payroll software reflects the same dates so that direct deposits and tax deposits align.
  
  

Clear communication helps cut down on “When do we get paid?” questions and builds trust with your team.

Make 2026 the year you move away from a “set-and-forget” payroll approach. Instead, add a bit of structure.

For most private dental practices, a simple method works well:

Monthly or quarterly 15-minute review.

• Reconcile gross wages, taxes, and retirement plan contributions from payroll reports to your practice management and accounting software.
  
  
• Verify that owner and associate compensation aligns with your collection targets and agreed-upon formulas.
  
  
• Review any payroll adjustments (voids, off-cycle checks, corrections) to make sure there’s a clear explanation for each.
  
  

Year-end Verification.

• Confirm that totals on Forms W-2 and W-3 match the year-end Form 941 totals and your general ledger.
  
  
• Spot-check a few W-2s (one for a dentist, one for a hygienist, one for an assistant, and one for an administrator) to ensure that wages, pre-tax benefits, and retirement contributions are accurate.

Adding some structure now will make the year-end W-2 season much less stressful and give you better numbers for advisory meetings and long-term planning.

Not sure where to start? Contact us today!

References

Accounting Today. (2025, November 13). IRS ups limits for 401(k) and IRA contributions in 2026. https://www.accountingtoday.com.

Internal Revenue Service. (2025, November 13). 401(k) limit increases to $24,500 for 2026; IRA limit increases to $7,500 (IR-2025-111). https://www.irs.gov.

PayrollOrg. (2025, October 24). Social Security wage base increases to $184,500 for 2026. https://www.payroll.org.

Social Security Administration. (2025). Contribution and benefit base. https://www.ssa.gov.

Texas Workforce Commission. (2025). Unemployment insurance tax rates. https://www.twc.texas.gov.