Tax Deductions for Dentists in California

Dental Practice Expenses

California dentists running their own practice can deduct all ordinary and necessary business expenses. Dental supplies (gloves, masks, materials, instruments), lab fees, sterilization supplies, and patient care materials are fully deductible in the year purchased. Office rent, utilities, and maintenance are deductible. Dental software (Dentrix, Eaglesoft, Open Dental), billing systems, and patient communication platforms are deductible. Professional association dues (California Dental Association, ADA, specialty associations) and continuing education are deductible.

Dental Equipment & Technology

Dental equipment — chairs, X-ray units (digital sensors, panoramic X-ray, CBCT), CAD/CAM systems (CEREC), intraoral cameras, lasers, sterilization equipment — is depreciable business property. Under Section 179, you can expense up to $1,220,000 of qualifying equipment in the year purchased. Federal bonus depreciation (100%, restored by the OBBBA) allows immediate expensing. California does not conform to bonus depreciation — use Section 179 for California purposes. A CBCT unit costing $80,000 can be fully expensed in the year of purchase under Section 179, generating an $80,000 deduction.

Staff & Payroll

Dental hygienists, dental assistants, front desk staff, and office managers' wages are fully deductible. Payroll taxes (employer's share of Social Security and Medicare), workers' compensation insurance, and employee health insurance contributions are deductible. Employee retirement plan contributions (employer match to a 401(k)) are deductible. California requires dental practices with 5 or more employees to offer a retirement savings option — the CalSavers program is available as a default option.

Retirement Plans for Dentists

Dentists are among the highest earners in healthcare — and retirement planning is critical to managing their tax burden. A defined benefit plan combined with a 401(k) can allow contributions of $200,000–$400,000+ per year for dentists over 50 with high income. All contributions are fully deductible and reduce both federal and California income tax. KDA designs retirement plans for dental practices that maximize deductible contributions while meeting the needs of all employees.

California Dental Practice Tax Rules

California dental practices face the same non-conformity issues as other healthcare professionals: no QBI deduction on the California return, no bonus depreciation, and the PTET election available for S corps and partnerships. California also has specific rules for dental practice entities — dental practices in California must be organized as a professional corporation (PC) or a professional limited liability company (PLLC), not a regular LLC or corporation. KDA ensures dental practice entity structures comply with California professional corporation rules while maximizing tax efficiency.