Dentists are among the highest-earning professionals, but also among the most heavily taxed. Between federal, state, payroll, and self-employment taxes, it can feel like 40–50% of every extra dollar disappears before it hits your account.
The good news: with the right structure and proactive planning, it’s entirely possible to save in taxes as a dentist each year without taking on extra risk or working more days. For many dentists, $50,000+ of annual tax savings is simply the result of fixing “leaks” in both the practice and personal plan.
Below are some of the core strategies we use with dentists to help them keep more of what they earn- often $50,000 or more per year -by being smart with both their business and personal finances.
Choose The Right Business Structure
If you own your practice or do contract work, your business structure quietly sets the rules for how much tax you’ll pay. Many dentists start as sole proprietors or single-member LLCs because it’s simple, but as income grows, that setup often leaves tens of thousands of dollars on the table.
Electing S corporation status can allow you to divide your income between salary and owner distributions. You pay payroll taxes on your salary but not on distributions, which can reduce your overall tax bill. The key is to set a “reasonable” salary for your clinical work and let the rest flow as S-corp distributions.
If you’re an associate receiving 1099 income, you can often set up your own professional entity to access similar benefits (and better retirement plan options). This should be reviewed annually with your CPA, because for a high-earning dentist, the combination of the right entity, right salary level and right state elections can easily mean $10,000–$30,000 in tax savings by itself.
Advanced twist: many practice owners also benefit from separating the “practice” entity from the “real estate” or “management” entity. Done correctly, this can improve liability protection, support state pass-through (SALT) tax elections, and open the door to better retirement and succession planning.
Maximize Retirement Contributions
For both practice owners and associates, retirement plans are one of the easiest and most powerful long-term tax shelters available.
A basic 401(k) is a great start, but most dentists can go much further. High earners can:
- Add a profit-sharing component to a 401(k)
- Layer on a cash balance or defined benefit plan
- Coordinate spouse wages to increase total plan contributions
Depending on your income, age, and team size, it’s common for a dentist-owner to deduct well over $50,000–$150,000 per year into retirement plans.
If you’re an associate without access to a plan through your employer, consider opening a SEP-IRA or Solo 401(k). Every dollar you contribute is money going toward your future instead of the IRS, and a Solo 401(k) often allows higher contributions and Backdoor Roth options compared to a SEP.
Time Equipment Purchases Wisely
For practice owners, dentistry is an equipment-heavy business, and that can work in your favor. Chairs, scanners, CBCT, CEREC units, and X-ray systems often qualify for Section 179 deductions or bonus depreciation.
If you’re already planning to buy new equipment, talk to your CPA about timing. In some years, it makes sense to deduct as much as possible immediately. In other years, spreading deductions out can keep you in key tax brackets or preserve other tax benefits like the Qualified Business Income (QBI) deduction.
If you own your building, a cost segregation study can accelerate depreciation and unlock tens of thousands in deductions in earlier years. These opportunities don’t show up automatically. Your CPA has to plan and coordinate them before and during filing season.
Read more: How to Deduct the Cost of Your Equipment Faster
Structure Benefits Smartly
Offering benefits isn’t just good for attracting and retaining a great team, it’s also a smart tax move. Many practice owners don’t realize how much can be shifted from “taxable wages” to “tax-favored benefits.”
For example, health insurance premiums, continuing education, uniforms, and professional dues can often be paid through the business, reducing taxable income. Some of these can be structured as tax-free benefits to employees, helping you keep staff happy without increasing payroll taxes.
For associates, negotiating reimbursement or pre-tax treatment of these expenses (via accountable plans or benefit policies) can lower your own tax bill.
Don’t forget an accountable plan. With a properly designed accountable plan, practice owners can reimburse business-related home office use, travel, CE, phones, and internet from the practice to the owner tax-free, while still getting a deduction inside the practice.
Capture Every Tax Deduction
Many dentists miss legitimate deductions simply because they don’t realize what qualifies or their bookkeeping isn’t kept up in real time. Some common deductible costs: dental supplies, lab fees, software, insurance, marketing, merchant fees, uniforms, and more.
If you regularly work from home on scheduling, payroll, chart reviews, or marketing, you may qualify for a home-office deduction or tax-free reimbursements through an accountable plan, as long as the space is used exclusively and regularly for business.
To make it easier to capture these deductions, it’s best to keep business and personal accounts separate and record expenses accurately. At Core Advisors, we use weekly “live accounting” in QuickBooks Online so our dentists always know where they stand and we can spot tax-saving opportunities before year-end.
Use Family and Home-Based Strategies (The Right Way)
A lot of “barstool tax advice” floating around the dental world centers on family and home-based strategies.
Done sloppily, these can cause problems.
Done correctly, they can be a meaningful part of your tax plan.
“Have kids, pay ’em” – employing your children properly
Paying your children out of the practice can be a legitimate strategy when:
- They’re doing real, age-appropriate work for the business
- The pay is reasonable for the tasks they perform
- You’re following normal payroll and documentation rules
When set up correctly, you’re effectively shifting income from your higher tax bracket to their (typically) much lower bracket, while still keeping money in the family. This can help fund savings for them, Roth IRAs in some cases, or other long-term goals.
The details matter here – job descriptions, documentation, and which entity does the paying all need to line up with IRS rules – so this is something we design carefully on a client-by-client basis rather than a one-size-fits-all checklist.
Using your home for short-term rental for the practice (Augusta-style)
In some situations, you may be able to rent your home or a second home near your practice to your business for a limited number of days per year when it’s used for legitimate business purposes. Think about planning retreats, team meetings, or strategy sessions.
Under rules often referred to as the “Augusta Rule,” a carefully structured short-term rental can potentially be deductible to the practice while the rental income is not taxable to you personally, up to a certain number of days per year.
Again, the benefit comes down to doing it the right way:
- The use has to be for real business purposes
- The rent has to be supportable relative to similar spaces
- The documentation needs to be clear and consistent
We intentionally don’t publish all of the mechanics online; instead, we walk through whether it makes sense for your situation and how to do it in a compliant way.
Don’t Overlook Personal Tax Opportunities
Tax planning doesn’t stop at the practice door. Your personal finances, family structure, and investment strategy play just as big a role in how much you ultimately keep.
Examples we often implement with dentists:
- Coordinating spousal income and benefits (wages, retirement, health insurance)
- Planning around student loans and income-driven repayment where applicable
- Using Health Savings Accounts (HSAs) when appropriate as “stealth” retirement vehicles
Build Wealth In A Tax-Efficient Way
As a high-income earner, how you invest can matter as much as how much you earn.
In addition to your retirement plan, consider a Roth IRA or Backdoor Roth if you exceed income limits. Contributions aren’t deductible today, but the growth and withdrawals are tax-free, which can be a huge advantage later in life.
If you have kids, a 529 college savings plan can also help: contributions may qualify for state tax deductions or credits, and the funds grow tax-free when used for education.
If you invest personally, look for tax-efficient funds and coordinate with your advisor on tax-loss harvesting, which involves selling certain investments at a loss to offset gains. The key is to coordinate this with your CPA so your investment and tax strategies are aligned, not working against each other.
Leverage Real Estate Ownership
Many dentists own their office building or invest in rental real estate on the side. When it’s structured correctly, those properties can provide excellent tax advantages and long-term wealth building.
If your practice rents space from a building you own, that rent is deductible for the business and taxable to you, but the lease terms, rent amount, and entity choice all impact your overall tax bill. A dental-focused CPA can help you fine-tune the arrangement.
Outside the practice, investment properties bring deductions for depreciation, mortgage interes,t and maintenance. In some cases, you can even offset dental income with real estate losses if you or your spouse qualifies as a real estate professional under IRS rules.
Charitable Giving With Intention
Charitable giving can also reduce your tax bill when done strategically. Instead of donating only cash, consider giving appreciated stock or using a donor-advised fund. You’ll avoid capital gains tax and still claim a deduction for the fair market value if you itemize.
If you’re planning several years of giving, “bunching” donations into a single high-income year can push you over the standard deduction threshold and increase your tax savings.
Stack Strategies: How Dentists Actually Get to $50,000+ in Tax Savings
No single strategy is usually worth $50,000 by itself. The real savings show up when you stack several smart decisions together.
For example, a busy practice owner might:
- Optimize S-corp salary and distributions
- Add a 401(k) with profit sharing and a cash balance plan
- Implement an accountable plan for owner reimbursements
- Put their kids on payroll for real, documented work in the practice
- Use cost segregation on the office building
- Use the “Augusta rule” to occasionally rent their home to the practice for legitimate business events
- Elect a state pass-through (SALT) workaround where available
Individually, each of these might save $5,000–$15,000 per year.
Together, it’s very common to see $50,000+ in annual tax savings for a successful dentist without cutting lifestyle or working more days.
Why Work With Core Advisors For a Holistic Approach to Dentist Wealth
At Core Advisors, we believe your practice and your personal financial life should never be treated in isolation. Your work is how you earn, but your integrated plan is how you keep and grow your wealth.
As dental-focused CPAs and financial planners, we understand your unique mix of W-2 and 1099 income, equipment costs, debt, and staff compensation structures.
Our team combines:
- Weekly “live accounting” so your numbers are always current
- Proactive tax strategy using specialized tax projection tools
- Integrated personal financial planning (cash flow, debt, retirement, investing)
That means we’re not just filing returns, we’re helping you design the entire picture so taxes, practice decisions, and personal goals all work together.
On the personal side, we use tools like RightCapital and Elements to track your plan, monitor progress, and give you clear, simple recommendations.
If you’d like to see how much more you could be saving each year in taxes and how that translates into real wealth over time, we’d love to help.
Next step: Book an introductory call with us.
We’ll review your current tax returns, practice structure, and personal goals and outline the top 3–5 strategies that could have the biggest impact for you.
