July 24, 2025
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBB), a massive tax and spending legislation that touches almost every corner of the economy.
For dentists who own their practices, especially those in high tax brackets, this bill brings some welcome tax relief, a few new planning opportunities, and, yes, a couple of curveballs too. Whether you're a solo practitioner or own multiple locations, the changes in this legislation could significantly impact your tax liability, practice investments, and even how you help your kids pay for college.
In part one of this two-part series, let's unpack the bill and how it may affect dentists.
TCJA Tax Cuts Made Permanent
Lower Tax Brackets: Here to Stay
One of the biggest headlines is that the individual tax brackets introduced by the TCJA are now permanent. These include 10%, 12%, 22%, 24%, 32%, 35%, and 37%. For a dentist earning $800,000 annually, keeping that 37% top bracket instead of reverting to 39.6% can mean tens of thousands in annual tax savings. This change alone allows for more confident long-term tax planning.
A Bigger Standard Deduction
Starting in 2026, the standard deduction jumps to $31,500 for joint filers and $15,750 for singles. Let’s say you're a married dentist who doesn’t have significant mortgage interest or charitable deductions. You would get a flat $31,500 off your taxable income without the hassle of itemizing.
100% Bonus Depreciation: Equipment Shopping Spree?
Have your eye on that $120,000 CBCT machine? Under the OBBB, you can deduct the full purchase price in the year it’s placed into service. This applies to most equipment with a lifespan of 20 years or less. Thinking about remodeling your office or upgrading to a fully digital workflow? These expenses can now give you immediate tax relief.
However, when it comes to bonus depreciation, remember to keep an eye on the forest for the trees. Don't buy a large piece of equipment solely for tax purposes, and remember there may be a strategic reason your CPA is deducting large capital purchases over several years rather than all at once.
50% Deduction for Employee Meals
You can still write off half the cost if you regularly provide lunches during team training days or grab lunch with your office manager to review schedules and financials. These are not huge savings, but over a year, they add up and support a positive team culture.
QBI Deduction
The 20% qualified business income deduction (Section 199A) continues but still excludes many high-income dentists. The deduction phases out if your taxable income exceeds $494,600 (joint) or $247,300 (single). However, associate dentists or those ramping up a newer practice may still qualify.
Example: An associate dentist earning $220,000 might reduce their taxable income by $44,000 with the QBI deduction, saving nearly $10,000 in taxes.
SALT Deduction Cap: Temporarily More Generous
Timeline
From 2025 to 2029, the state and local tax deduction cap jumps from $10,000 to $40,000 for those with Modified Adjusted Income (MAGI) under $500,000. This could put real money back in your pocket if you're paying hefty property and state income taxes (hello, California!). This expanded cap goes away in 2030, so plan accordingly.
Income Phase Out
Let’s say your MAGI is $600,000. Your increased SALT deduction would be reduced by 30% of the $100,000 overage, which is $30,000, putting you back at the old $10,000 cap. So, this break mostly helps dentists in the $300K—$500K income range, but those over the income phase-out limit will still get the $10,000 cap.
Pass-Through Entity Workarounds Survive
Many states allow S-corporations and partnerships to pay state income taxes at the entity level to get around the SALT cap. This was nearly eliminated, but it survived the final bill.
Itemized Deduction Limits for Top Earners
If you’re in the 37% bracket, over $770,000 joint or $640,000 single, your itemized deductions are now limited to 35 cents on the dollar.
For example, a $100,000 donation or mortgage interest write-off only reduces your tax by $35,000, not $37,000. This isn’t a dealbreaker, but worth considering in your charitable giving or home purchase decisions.
Senior Bonus Deduction
If you or your spouse is 65 or older, you get a $6,000 bonus deduction through 2029. A retired spouse with minimal income could still help the household tax situation. The deduction phases out between $75K and $175K MAGI (single) and $150K to $250K (joint).
This will primarily benefit retired dentists with fixed incomes.
Overtime and Tips Deductions
Overtime Deduction
Let’s say your dental assistant normally earns $20/hour but pulls some extra shifts at $30/hour. That $10/hour difference, known as the "premium," can be deducted, up to $12,500 a year.
For Employers
Any overtime paid to your employees must be tracked and reported on the employee’s W2 or 1099. The IRS is set to release implementation guidelines for employers soon.
Tips Deduction
This deduction applies only to industries where tipping is already customary, such as hospitality, salons, and food service. Since tipping is not a standard practice in dental offices, this provision will not apply to most dental practice owners or their employees.
Increased 1099 Filing Threshold
No more sending out 1099s for the dog groomer you paid $650 to clean the office mascot. Starting in 2026, the threshold rises to $2,000 from the current $600. For practices using freelance designers, marketing consultants, or temp hygienists occasionally, this simplifies your admin load.
Auto Loan Interest Deduction
Are you considering buying a new vehicle in your personal name? If it was assembled in the U.S. and purchased after 12/31/24, the interest is deductible (up to $10,000) through 2028. The deduction phases out for MAGI above $100K (single) and $200K (joint). Campers and RVs don’t count, sorry, road trip fans.
Student Loan Overhaul
Caps on Federal Borrowing
Dental school is expensive. Historically, many dental students have relied on federal graduate loans to fund the full cost of tuition, fees, and living expenses, often borrowing $300,000 or more. Under the new law, federal graduate borrowing is capped at $200,000 total. That means future dental students needing more than this amount will have to seek private loans, which often come with higher interest rates, more stringent underwriting requirements, and less favorable repayment terms.
This shift will likely impact those who apply to dental school, how they plan their finances, and the burden they face after graduation. Students from middle- and upper-middle-class families who don't qualify for need-based aid may feel this pinch the most. Practices planning to expand by hiring new grads should know that future associates may face steeper financial pressures and less flexibility when negotiating compensation packages.
Repayment Plan Changes
The Act eliminates many of the income-driven repayment options currently available, such as SAVE and PAYE. For borrowers taking out federal loans after July 2027, the choices narrow to either a standard 10-year repayment plan or a new income-driven plan that stretches out for 30 years before offering any forgiveness. This longer runway increases the total interest paid and delays financial freedom for younger dentists.
For practice owners mentoring new grads, it's important to understand that this change may increase the number of associates prioritizing higher initial pay or bonuses over equity or long-term incentives.
Parent PLUS Loans - Limitations
Parents can now borrow no more than $65,000 in total federal Parent PLUS loans per child (or $20,000 per year). This is a dramatic shift from the current structure, which places no upper limit on these loans. Families who had been anticipating using federal funds to cover the full cost of a child's dental, medical, or law school must plan well in advance.
What Parents Need to Do Now
Start preparing early if you're a dentist planning to send your children to a professional school (dental, medical, or law).
The takeaway is that the days of "we'll borrow whatever it takes and pay it back slowly" are gone. Under the new federal lending limits, advance planning will be critical for families aiming to fund high-cost graduate degrees.
For more on saving for college, check out our January 2025 article, Saving for College Education: A Guide for Dentists.
529 Plans Expanded
The One Big Beautiful Bill Act significantly broadens the use of 529 college savings plans, giving high-income families far more flexibility in planning for their children's education. Traditionally used for tuition and qualified education expenses at accredited colleges and universities, 529 plans can now be used for a wider range of educational costs.
Starting in 2026, parents can use up to $20,000 annually from 529 plans for K–12 private school tuition, up from the current $10,000 cap. But that’s just the beginning. Newly qualified expenses now include:
These changes can be a game-changer for families with children who might not follow a conventional path or require alternative education support. For dentists thinking long-term, it offers a strategic tool for funding everything from early academic enrichment to credentialing programs that support family members entering healthcare or business careers.
If you haven't opened a 529 plan for your child or if your plan hasn’t been reviewed in a few years, now’s the time. The new rules expand not just where the money can go but how early and broadly it can be used.
For more on 592 Plans, check out our May 2024 article, The Benefits of Utah’s My529 Plan for Your Children’s College Savings.
Clean Energy and EV Credits Are Ending
If you plan to install solar panels, upgrade to energy-efficient windows, or buy a new EV, do it soon. These credits vanish by the end of 2025 (or mid-2026 for commercial buildings).
The One Big Beautiful Bill Act offers plenty of tools for strategic financial planning, but it also comes with deadlines, income limits, and temporary perks. For dentists who are high earners and practice owners, this is a great time to revisit your tax strategy. We will cover much more in the Act in Part Two!
Not sure where to start? Contact us today!
References
1. The One Big Beautiful Bill Act (Senate Version). U.S. Senate. July 2025.