Depreciation: A Guide for Private Practice Dentists

August 27, 2026
Depreciation is how a dental practice deducts the cost of long-lasting purchases like chairs and equipment over several years instead of all at once. 

That sounds like a bookkeeping detail. It is actually one of the two reasons your profit and your bank balance never match, the reason a $50,000 purchase in December can save you far less than you expect, and the reason a decision you made five years ago is still shaping the tax bill you pay. It is also one of the few places on your return where you get a real say. Here is how it works, and where your say comes in.

The short version:

• Depreciation is a timing rule. You still deduct the full cost of what you buy. You just deduct it over several years instead of all at once.
  
  
• It lowers your taxable income without costing you cash. That is unusual, and it is worth understanding.
  
  
• You have more control over it than you think. For most equipment you can take the whole deduction now, spread it out, or land somewhere in between.
  
  
• Your list is probably out of date. Equipment you replaced years ago may still be sitting on it, holding deductions nobody ever claimed.
  
  

What Depreciation Actually Is

Buy something small, like gloves or a box of burs, and you deduct it the year you buy it.

Buy something that lasts for years and the rules change. A $30,000 chair does not give you a $30,000 deduction the day you sign. The cost gets spread across the years the chair is expected to earn for you, at roughly $6,000 a year for five years, with the early years running a little higher than the later ones.

The logic is that the chair is not really an expense. It is a trade. You handed over cash and got equipment worth about the same, so the deduction arrives gradually as the chair earns its keep. Your practice keeps a running list of these items and what is left to deduct on each.

Why Your Profit and Your Bank Balance Disagree

Two things pull in opposite directions:

• Depreciation lowers your profit without touching your bank account. You are deducting money you spent in an earlier year, so your taxable income drops but no cash leaves today.
  
  
• Loan payments drain your account without lowering your profit. The interest portion is deductible. The principal portion is not. You are writing checks you get no deduction for.
  
  

Put those together and you get the two situations every owner eventually hits:

• Profitable on paper, tight on cash. Usually means you are paying down a lot of loan principal.
  
  
• Cash in the bank, small tax bill. Usually means a big equipment purchase is being written off.
  
  

If you have ever asked why you owe tax on money you do not seem to have, this is almost always the answer.

How Long Things Take to Write Off

You do not get to pick these. What you can pick is whether to follow the schedule at all. Small purchases are the exception: anything under $2,500 per item can usually be deducted right away, so a $900 curing light never has to go on the list.

Your Three Choices

You are not locked into one approach for the whole year. Most well-planned years use a mix.

What Is Probably Sitting on Your List Right Now

•    Equipment you retired may still be on the list. Throw out a chair with cost left to deduct and that remaining amount is generally deductible the year you stop using it. Nobody claims it if nobody mentions the chair is gone.
•    Leased equipment usually is not yours to depreciate. Financed equipment usually is. The two can look identical on a bank statement.

This is where a decision from years ago catches up with you, usually in your favor.

Why the Timing Is Worth Real Money

• A deduction is only worth your tax rate. Income is taxed in layers, and a deduction removes your top layer. Deduct $10,000 when that layer is taxed at 24 percent and you saved $2,400. The same $10,000 in a 37 percent year saves $3,700.
  
  
• Buying equipment to lower your taxes is backwards. This is the December purchase problem. Spend $50,000 you did not need to and you might save $17,500 in tax. You are still down $32,500.
  
  
• Once you take a deduction, it is gone. You cannot reclaim it for a better year later.
  
  

If You Are Opening or Buying a Practice

• The usual instinct is backwards here too. New practices have thin income and low tax rates, so writing everything off immediately spends your best deductions when they are worth the least.
  
  
• Waiting until your collections mature can be worth about three times as much.

What Happens When You Sell

• The deductions come back. What you already wrote off on your equipment gets taxed as regular income rather than at the lower rates that apply to selling a business.
  
  
• The more aggressively you wrote things off, the bigger that piece becomes, and it usually lands in one of the highest-income years of your career. If a sale is anywhere on your horizon, this belongs in the conversation now, not at closing.
  
  

The Bottom Line

You are choosing which years get the deduction for things you already bought, and that choice is worth real money. The mistake is not choosing at all. Three questions worth asking:

1. What is still left to deduct on the equipment I own, and is any of it already gone from the office?
   
   
2. What tax rate do you expect me to be in this year, and next year?
   
   
3. What should I be doing before the end of the year?
   
   

Not sure where to start? Contact us today!

References

Internal Revenue Service. (n.d.). Tangible property final regulations. https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations

Internal Revenue Service. (n.d.). Topic no. 704, Depreciation. https://www.irs.gov/taxtopics/tc704

Internal Revenue Service. (2025, October 9). IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill (IR-2025-103). https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill

Internal Revenue Service. (2025). Publication 544, Sales and other dispositions of assets. https://www.irs.gov/publications/p544

Internal Revenue Service. (2025). Publication 946, How to depreciate property. https://www.irs.gov/publications/p946

Internal Revenue Service. (2025). Revenue procedure 2025-32. https://www.irs.gov/pub/irs-drop/rp-25-32.pdf

Internal Revenue Service. (2026). Treasury, IRS issue guidance on the additional first year depreciation deduction amended as part of the One, Big, Beautiful Bill. https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-the-additional-first-year-depreciation-deduction-amended-as-part-of-the-one-big-beautiful-bill