As we enter 2026, several updated tax limits and thresholds may impact how dental practices plan for equipment purchases, retirement contributions, and overall cash flow. Understanding these figures early in the year can help dentists make informed, compliant financial decisions rather than reacting under year-end pressure.
While not every number will apply to every practice, the figures below are commonly relevant for dental practice owners.
Depreciation and Equipment Planning
For dentists considering equipment purchases such as imaging systems, chairs, or technology upgrades, depreciation rules remain an important planning consideration.
For 2026:
- Bonus depreciation: 100% for qualifying assets placed in service
- Section 179 expensing limit: $2.56 million
- Section 179 phaseout threshold: $4.09 million in total qualifying purchases
These provisions allow eligible equipment to be expensed in the year of purchase, but immediate expensing is not always the optimal strategy. Dentists should evaluate depreciation elections in the context of profitability, future income expectations, and overall tax planning goals.
Retirement Plan Contribution Limits
Retirement plans continue to be a key planning tool for dentists looking to manage taxable income while building long-term wealth.
Key 2026 limits include:
- 401(k), 403(b), and 457 deferrals: $24,500
- Catch-up contributions (age 50 or older): $8,000
- Additional catch-up contributions (ages 60–63): $3,250
- SIMPLE IRA deferrals: $17,000
- Total defined contribution plan limit: $72,000
- Defined benefit plan annual benefit limit: $290,000
Dentists with higher income or ownership interests may want to review whether their current retirement plan structure continues to align with these updated limits.
Employee Compensation Thresholds
Certain compensation thresholds affect retirement plan testing and employer obligations:
- Highly compensated employee (HCE): $160,000
- Key employee threshold for top-heavy plans: $235,000
- Compensation triggering SEP contribution requirement: $800
As practices grow and add associates or long-term team members, these thresholds can influence plan design and required employer contributions.
Health and Fringe Benefit Limits
For 2026, several benefit limits have also increased:
- Health Savings Account (HSA):
- $4,400 (individual)
- $8,750 (family)
- $4,400 (individual)
- Health FSA contributions: $3,400
- Health FSA rollover: $680
- Dependent care FSA: $7,500
- Monthly commuter and transit benefits: $340
- Monthly qualified parking: $340
These benefits can play a role in both employee retention and tax-efficient compensation planning.
Section 199A Qualified Business Income Deduction
Dentists operating as pass-through entities (S corporations, partnerships, or sole proprietorships) should be aware that the Section 199A qualified business income deduction begins to phase in between $201,750 and $276,750 of taxable income for single filers (double for married filing jointly).
Income levels, wages paid, and practice structure all affect whether—and to what extent—this deduction applies.
Planning Throughout the Year
These figures provide a framework for planning, but they should always be evaluated in the context of your practice’s profitability, ownership structure, and long-term goals. Equipment purchases, retirement contributions, and tax elections made earlier in the year often allow for more flexibility than last-minute decisions.
Dentists who understand these limits in advance are better positioned to make thoughtful, compliant financial decisions throughout 2026.
Contact us to understand how these 2026 tax limits apply to your specific practice can help support informed, compliant planning decisions.
Disclaimer: The information provided in this blog is for educational purposes only and may contain inadvertent errors or omissions. Tax laws and regulations change frequently, and individual circumstances vary. Always consult directly with your CPA or qualified tax professional before making any financial or tax-related decisions.