Guide to Dental Equipment Depreciation
Depreciation spreads the cost of dental equipment over time. It reflects how assets like dental chairs, X-ray machines, or computers lose value with use.
For dentists, it’s a key way to reduce their taxable income and improve cash flow. Knowing how it works helps you time purchases, claim larger deductions, and keep more of what you earn.
What Dental Equipment Qualifies for Depreciation?
Dental equipment qualifies as a depreciable asset if:
It's owned by you.
Used in your practice.
It has a clearly defined useful life exceeding one year.
It's primarily used for patient care or clinical work.
Common examples include:
Diagnostic tools like X-ray machines, CBCT scanners, and intraoral cameras
Treatment equipment such as dental chairs, delivery units, operatory lights, and handpieces
Sterilization and lab tools like autoclaves, ultrasonic cleaners, and milling machines
Computer-integrated systems used directly in clinical care, for example, CAD/CAM software and digital sensors
Note: You can depreciate dental equipment whether you paid in full or financed it.
Depreciation Timelines for Dental Equipment
Dental equipment is depreciated over different timeframes depending on its use. Most items fall into one of two categories:
3-year property: Clinical-use technology like intraoral cameras, CAD/CAM software, and imaging software
5-year property: Dental chairs, X‑ray machines (digital and CBCT), operatory lights, handpieces, autoclaves, and ultrasonic cleaners
Timing Matters: When Depreciation Begins
Equipment is only depreciable once it's placed in service. That means it must be actively used in your practice. For example, if you bought a handpiece at a convention in July 2024 but didn't start using it until May 2025, depreciation begins in May 2025—not July 2024.
Tax Planning Tip
Dental equipment must be installed, set up, and ready for use in your practice before you can claim depreciation. Simply ordering or receiving it isn't enough. If you're planning major purchases, coordinate with your vendors and installers early so the equipment is installed and ready to use before the end of the tax year.
Common Depreciation Methods for Dental Equipment
Most dental practices use the IRS’s Modified Accelerated Cost Recovery System (MACRS) to depreciate their equipment. MACRS includes two main methods:
Straight-line depreciation spreads the asset's cost evenly over its useful life.
Accelerated depreciation allows larger deductions in earlier years (e.g., the 200% and 150% declining balance methods)
Why Your Depreciation Method Matters
The depreciation method affects taxes, cash flow, financial reports, and long-term planning. Once you choose a method for an asset, switching requires IRS approval. That’s why it’s important to understand your options.
Accelerated depreciation gives you bigger deductions upfront. This is ideal for high-income years or growing practices.
Straight-line depreciation smooths your tax liability over time. This offers predictable annual deductions.
Since depreciation strategies get complex fast, many dentists decide to work with tax professionals who specialize in accounting for dentists. This not only ensures your strategy is aligned with your long-term goals but also frees up your time to focus on treating patients.
Bonus Depreciation in 2025
The One Big Beautiful Bill Act (OBBBA) brought back 100% bonus depreciation for qualified equipment placed in service after January 19, 2025. This tax incentive lets dental practices deduct the entire cost of eligible dental equipment in the year it’s first used.
Bonus depreciation:
Includes both new and used equipment
Applies to assets with a recovery period up to 20 years.
Has no dollar limit and applies automatically unless you opt out
That makes it especially useful for large equipment purchases when maximum upfront deductions are desired.
No Income Limit
Bonus depreciation is allowed to be used even if it causes or increases a net operating loss (NOL). There’s no income restriction, making it ideal for newer or expanding practices that want to boost cash flow during low-profit years.
Section 179: Expensing of Depreciation
OBBBA also raised the Section 179 deduction limit to $2.5 million for 2025. The deduction begins to phase out dollar for dollar when total equipment purchases exceed $4 million.
To qualify for Section 179:
The equipment must be used more than 50% for your dental practice.
If it's not used 100% for business, you can only deduct the business-use portion. For example, if a device is used 80% for your practice, only 80% of its cost qualifies.
It must be fully set up and in use by December 31.
Unlike bonus depreciation, Section 179 lets you pick which depreciable assets to expense. It also applies in most states, including those states that don’t follow federal bonus depreciation rules.
Income Limit Rule for Section 179
Section 179 has one key limitation: your deduction can’t exceed your practice's net income for the year. You can’t create a tax loss using it. However, if your deduction is larger than your income, the unused portion can be carried forward to future years.
Can You Use Both Bonus Depreciation and Section 179?
Yes, you can use both on the same tax return.
First, decide which assets you want to expense under Section 179.
Then, apply bonus depreciation to the remaining qualifying property.
This tax strategy gives you flexibility to optimize your deductions based on your practice’s financial needs.
Strategic Planning Is Key
A smart depreciation strategy starts with your practice’s goals. Established dental practices may want to maximize write-offs now. Growing practices might hold deductions for future years with higher income. Your choice affects both short- and long-term finances for your practice.
Partnering with a tax professional experienced in dental accounting helps you build a strategy that supports both current cash flow and long-term savings. They’ll help you choose the right mix of MACRS, Section 179, and bonus depreciation while making sure you don’t miss out on any tax deductions for your dental practice.
Schedule a consultation with our team to make sure your depreciation strategy matches your practice’s growth plans.
Example of a Strategic Depreciation Approach
Dr. Williams, who owns a growing dental practice in Jacksonville, Florida, bought a $100,000 digital X-ray machine in March and placed it in service immediately. She used bonus depreciation to deduct the full cost in the first year. This strategy reduced her taxable income and improved cash flow during her expansion phase.
The following year, her practice bought $60,000 in smaller equipment. This time, she chose straight-line depreciation to spread deductions evenly and balance her tax savings over time.
Master Equipment Depreciation With Expert Help
Understanding how dental equipment depreciation works can save you thousands in taxes. It’s a key strategy for strengthening your practice’s financial position.
Knowing what qualifies, how timing works, and which methods to use puts you in control of your tax planning. With expert guidance from a dental-focused tax professional, depreciation becomes a powerful tool for planning ahead and growing your practice.
