Introduction
In dentistry, “Production” is vanity, “Collection” is sanity, and “Overhead” is reality.
You might produce $1.5 million a year, but if your overhead is 75%, you are making less than an associate dentist who takes zero risk.
In 2026, the business of dentistry has become harder. Insurance reimbursements are down, staff wages are up, and according to new data, 13% of dentists are considering selling or closing their practice this year.
But for those who stay, the tax code has never been friendlier. Thanks to the One Big Beautiful Bill Act (OBBBA), practice owners now have permanent access to massive tax breaks like 100% Bonus Depreciation and the QBI Deduction.
In this guide, we break down the benchmarks you need to hit, the embezzlement risks you need to block, and the tax strategies that will keep your money in your pocket.
Part 1: The “60% Rule” (Overhead Benchmarks)
The average dental practice runs at 63-67% overhead. The top 10% of practices run at 55-60%.
If your overhead is above 70%, you are in the “Danger Zone”. Here is exactly where your money should be going in 2026:
- Staff Costs: 25-28% of collections. If you are over 30%, you are overstaffed or under-producing.
- Dental Supplies: 5-8%. Use a formulary to stop ordering random composites.
- Lab Fees: 8-12%. (Lower if you use CEREC/3D Printing).
- Facility (Rent): 5-7%.
💡 The Fix: If your staff costs are high, don’t fire people—increase production. 👉 See the Tech Stack that increases production efficiency
Part 2: The “Silent Partner” (Embezzlement)
Here is a terrifying statistic: 60% to 70% of dentists will be embezzled at some point in their career.
It usually isn’t a stranger; it’s your most trusted office manager. In 2026, “Upcoding” and “Billing Fraud” are top targets for government audits.
How to protect yourself:
- The Daily Deposit Rule: The person who opens the mail (checks) cannot be the same person who makes the bank deposit.
- Audit the Adjustments: Embezzlers hide theft by marking patient accounts as “Paid by Insurance” or writing off balances as “Bad Debt.” Review your Adjustment Report monthly.
- Outsource Billing: In 2026, many practices are moving to outsourced billing to remove the temptation from the front desk entirely.
Part 3: The 2026 Tax Updates (OBBBA)
The One Big Beautiful Bill Act (OBBBA) has permanently restored several key deductions for practice owners.
1. Section 179 (The Equipment Write-Off)
The limit for 2026 has increased to $2,560,000.
- Strategy: Buy that CBCT, CEREC, or new chair package before December 31st. You can write off the entire purchase price this year, even if you finance it.
2. 100% Bonus Depreciation
Bonus depreciation is officially back to 100% for assets placed in service after Jan 19, 2025.
- Strategy: If you own your building, this is huge. You can use a Cost Segregation Study to strip out the plumbing and electrical costs and deduct them immediately.
3. Permanent QBI Deduction
The 20% “Pass-Through” deduction is now permanent.
- The Catch: It phases out for high-income earners (starting at $403,550 for joint filers). You may need to increase your W-2 wages to maximize this.
👉 Read the full breakdown: The Dentist’s Tax Guide 2026
Part 4: Real Estate (Your Exit Strategy)
The wealthiest dentists don’t just own a practice; they own the real estate it sits on. Buying your building allows you to pay yourself rent.
Advanced Strategy: Cost Segregation Stop depreciating your building over 39 years. By performing a Cost Segregation study, you can reclassify ~30% of your building as “Personal Property” (5-year life) and use 100% Bonus Depreciation to write it off instantly.
👉 Deep Dive: Cost Segregation for Dentists
Part 5: The 2026 Software Stack
You cannot run a million-dollar business with a paper schedule. The trend for 2026 is Cloud-Based PMS.
- The Old Guard: Dentrix / Eaglesoft (Server-based, expensive IT).
- The New School: Curve Dental / Open Dental (Cloud-based, accessible anywhere).
Why switch? Cloud software integrates better with AI scheduling bots and automated billing tools, which are essential for keeping overhead down. 👉 Review: Best Dental Practice Management Software (Cloud vs Server)
Conclusion: Be the CEO
You went to dental school to be a clinician, but you graduated as a CEO. To survive in 2026, you must know your numbers.
Your Action Plan:
- Calculate your Overhead. Is it under 60%?
- Review your Adjustments. Are you safe from embezzlement?
- Plan your CapEx. Use Section 179 to upgrade your technology tax-free.
