Each year, changes to the U.S. tax code impact how dental practices manage their finances. Whether it’s new deductions, altered depreciation schedules, or updates to employee-related tax credits, staying informed is essential to maintaining compliance and optimizing financial performance.
This guide summarizes the most relevant 2025 tax law updates for dental practice owners and explains how specialized CPAs can help apply these changes effectively.
1. Section 179 and Bonus Depreciation Updates
Dental practices often invest in expensive technology and equipment. In 2025, the bonus depreciation allowance has decreased from 80% to 60% — a scheduled phase-out under the Tax Cuts and Jobs Act.
- What this means: Practice owners can still deduct a significant portion of equipment purchases in the year of acquisition, but the available deduction is smaller than in previous years.
- Action step: Consider adjusting capital investment timing and cash flow strategy.
Ash Dental CPA advises clients on when and how to schedule equipment purchases to maximize allowable deductions under current IRS rules.
2. Changes to Business Meal Deductions
Temporary provisions that allowed 100% deduction of business meals from restaurants have expired. As of 2025:
- Meals with clients or vendors are now 50% deductible
- Office snacks or food for employees are also capped at 50%
Dental practice owners should ensure expense tracking systems are updated accordingly.
3. Employee Retention Credit (ERC) Audits and Caution
Many dental practices that claimed the Employee Retention Credit (ERC) in previous years are now subject to increased IRS scrutiny. In 2025, the IRS has intensified enforcement measures due to widespread abuse of the program.
- Recommendation: Maintain thorough documentation if the credit was claimed.
- Caution: Avoid third-party promoters offering retroactive ERC claims without CPA review.
Henry Kulik CPA supports dental offices in managing IRS correspondence and validating ERC eligibility through compliant records.
4. Updated Standard Mileage Rate
For practices that reimburse associates or staff for travel between locations, note the IRS standard mileage rate for 2025 is:
- 66.5 cents per mile for business-related driving (subject to mid-year adjustment)
Accurate mileage tracking is essential for deductions and reimbursements. Practices should use updated mileage logs or software.
5. Retirement Plan Contribution Limits Increased
Offering retirement plans like a 401(k) or SIMPLE IRA is common in dental offices. For 2025:
- 401(k) contribution limits have increased to $23,000 (with an additional $7,500 catch-up for those 50+)
- SIMPLE IRA limits have also increased
Dental practices may consider adjusting their benefit offerings or employer match policies accordingly. CPAs like those at Ash Dental CPA assist practices in structuring tax-advantaged benefits for staff retention and financial planning.
6. State-Level Tax Adjustments
In addition to federal updates, several states have modified their small business tax policies. These include:
- Changes in pass-through entity tax elections
- Altered sales tax rules for services and digital products
- New compliance requirements for LLCs and S-Corps
Practice owners should consult their CPA regarding their specific state to remain compliant with local tax laws.
7. Increased IRS Filing and Penalty Thresholds
Beginning in 2025, the IRS has adjusted:
- Thresholds for 1099-NEC filings
- Late filing penalties
- Electronic filing mandates
Dental practices using contractors or operating as multi-entity structures should verify their reporting practices are updated to avoid penalties.
