If you run a dental practice or any kind of business, the new tax law signed on July 4th brings good news. Officially called the One Big Beautiful Bill, this law locks in some key tax rules that were about to expire, revives others, and gives business owners more clarity to plan ahead.
This isn’t about complicated policy debates. It’s about understanding how these changes affect your income, your cash flow, your ability to reinvest in your business, and your long-term plans.
Here are the key updates about the Big Beautiful Bill for dentists and business owners, and what they should understand.
The 20 Percent Deduction for Pass-Through Businesses Is Now Permanent
If your business is an S corporation, partnership, or sole proprietorship, you’ve probably heard of the 20 percent deduction for Qualified Business Income, also known as Section 199A.
With the new law, the deduction is now permanent.
What this means for you: This deduction lets you exclude 20% of your business profits before income tax is calculated. It’s a big tax savings for those who qualify, and now you can plan around it without worrying about it disappearing in two years. Dental professionals fall into the service professional category so there are phasouts at certain income levels. Plan ahead for years where you can reduce your income to qualify.
You Can Fully Expense Business Equipment Again
Starting in January 2025, you will be able to deduct the entire cost of qualifying business equipment in the same year you start using it. This includes things like dental chairs, X-ray machines, furniture, and even certain improvements to your office or facility.
This is called 100 percent bonus depreciation. In the past, you had to spread out these deductions over several years, which meant getting smaller tax benefits over time. Now, you can take the full deduction up front.
The law also expands this to cover some types of manufacturing-related real estate, which may benefit dental labs and other related operations.
Why it matters: If you are planning to upgrade technology, refresh your operatories, or expand into a second location, this change helps you recover those costs faster and lower your tax bill in the same year you spend the money.
Higher Section 179 Limits for Expensing Equipment
Section 179 lets you immediately deduct the cost of qualifying assets like dental software, practice management tools, imaging equipment, and furniture, up to a specific dollar amount. The new law increases the deduction cap and allows more businesses to qualify.
Why it matters: Whether you’re doing a full build-out or just upgrading systems, Section 179 helps you deduct those costs right away. This is especially helpful if you’re reinvesting heavily in your practice as you grow.
You Can Now Deduct Research Expenses Again
Previously, businesses had to spread out research and development costs over five years, which hurt startups and companies doing product development. The new law reverses that rule.
Starting in 2025, you can deduct domestic research expenses in the year they occur. You can also go back and amend older returns to claim deductions you missed under the old rule.
Why it matters: If your business invests in innovation, engineering, or technology development, this change gives you more immediate tax relief and better cash flow.
Qualified Small Business Stock (QSBS) Now Has Better Terms
For those operating as a corporation, QSBS refers to stock issued that can qualify for tax-free gains when sold. While this mostly applies to founders, investors, or practice owners considering a future exit, the new rules are worth noting:
- You get a 50 percent tax break if you hold qualifying shares for at least three years
- That increases to 75 percent after four years
- You can exclude 100 percent of the gain if you hold the shares for five years or longer
- The total gain you can exclude has increased to 15 million dollars
- Businesses with assets of up to 75 million dollars can now issue qualifying stock
Why it matters: If you’re building a multi-location group, exploring a DSO model, or considering outside investment, these updates offer powerful tax planning opportunities for your future exit or liquidity event.
More Favorable Rules for Interest Deductions
Businesses that take on debt have been limited in how much interest they can deduct. Previously, those limits were based on EBIT, which excludes depreciation and amortization.
Starting in 2025, the rule shifts to EBITDA, which includes depreciation and amortization and usually results in a higher deduction.
Why it matters: If you are financing growth — whether through practice loans, equipment financing, or a line of credit — this change means you can likely deduct more of your interest, improving your after-tax cash flow.
Other Key Business Provisions
- The excess business loss limitation under Section 461(l) is now permanent. This limits how much loss you can deduct in any given year but will now adjust for inflation
- Businesses using pass-through entity tax (PTET) elections can continue to do so. This is helpful for dental practices operating in high-tax states that use PTET to bypass the state and local deduction cap
- Businesses can now amend prior year returns to claim R&D deductions that were previously amortized
- Opportunity Zones will now operate on a 10-year designation schedule beginning in 2027, which could be relevant for those investing in dental real estate or startup practices in qualifying areas
What About Individual Tax Changes?
Here are a few updates that may also affect you personally:
- The current tax brackets and standard deductions are now permanent
- The estate and gift tax exemption is increased to 15 million dollars per person, with annual adjustments for inflation
- The child tax credit will increase to 2,200 dollars in 2026
- Seniors over age 65 will get a new 6,000 dollar deduction
- Some income from tips and overtime may be deductible from 2025 through 2028, up to certain limits
- A new retirement account for children allows up to 5,000 dollars in contributions per year, plus a 1,000 dollar government match for qualifying newborns
- Clean energy tax credits for things like solar panels and electric vehicles are scheduled to expire starting in 2026
What to Do Next
This new law gives dental practice owners and entrepreneurs more certainty to plan ahead, along with new tools to improve cash flow and reduce taxes. It also revives several business-friendly rules that had recently expired or were about to.
Now is a great time to revisit your entity structure, equipment investments, debt strategy, and long-term goals in light of these changes.
If you want to walk through how this new law affects your practice specifically, we’re here to help.
Let’s talk about where you are now, and what opportunities this creates for the years ahead.
Simply head to our Contact page now to book an introductory call. We’re always here to help answer any questions.
Until next time!
