Many dental practice owners leave money on the table every year because they don’t fully understand Section 179. In 2025, the rules just got even more generous—and unlike in past years, these higher limits are here to stay.

For dentists, equipment purchases aren’t optional. Whether it’s replacing an outdated CBCT scanner, upgrading sterilization systems, or outfitting a new operatory, the investments add up quickly. Section 179 ensures those dollars come with an immediate tax benefit instead of a slow trickle of depreciation spread over years.

Think of it this way: instead of deducting a $150,000 imaging system over seven years, you can claim the full $150,000 this year—or in 2026 if that better fits your cash flow. Either way, the deduction is now permanently available at the expanded levels.

Caroline Nguyen, Town’s Tax Manager, notes: “The 2025 expansion wasn’t just a temporary bump. These limits are permanent, with inflation indexing starting in 2026. That changes how dentists should think about equipment planning—you can now time purchases for when they make the most sense for the practice, not just when Congress decides to extend a benefit.”

This guide walks through how Section 179 works under the new rules that took effect in 2025—what equipment qualifies, how it coordinates with bonus depreciation, and the planning steps that help dental practices maximize deductions in 2025 and in the years ahead.

What Is Section 179 and Why Does It Matter for Dental Practices?

Section 179 is a provision in the tax code that lets businesses deduct the full purchase price of qualifying equipment in the year it’s placed in service, rather than spreading the deduction out over its useful life.

For dentists, that means when you buy a $150,000 CBCT scanner, you can deduct the entire $150,000 this year instead of depreciating it at about $21,000 a year for seven years. The effect is simple but powerful: immediate tax savings that can be reinvested back into your practice.

This isn’t a loophole—it’s policy. Section 179 was created to encourage small and midsize businesses, like dental practices, to invest in their growth without waiting years for tax benefits.

Caroline Nguyen says: “I often tell dentists: Section 179 is like getting the IRS to subsidize your equipment upgrades upfront instead of on a payment plan. That’s a huge advantage when cash flow matters.”

2025 Section 179 Limits: The Biggest Increase in Years

The One Big Beautiful Bill Act (OBBBA) doubled Section 179 limits starting in 2025—and for the first time, those higher limits are permanent. That means the generous expensing rules dentists see this year won’t vanish; they’ll be available in 2026 and beyond, with annual inflation adjustments baked in.

Here's what changed:

• Maximum deduction limit increased to $2.5 million (up from $1.25 million in 2024)

• Phase-out threshold raised to $4 million (up from $3.13 million in 2024)

• Complete phase-out now occurs at $6.5 million in total equipment purchases

For most dental practices, these new limits mean every piece of equipment—from imaging systems to sterilizers to operatory chairs—can be deducted in full, even if multiple operatories or entire new locations are outfitted at once.

Example (2025): Dr. Jennifer’s practice purchased $800,000 of new digital imaging systems, patient chairs, and sterilization equipment this year. Under 2024 limits, part of her deduction would have been phased out. With the 2025 rules, she deducts all $800,000 immediately.

Forward-looking example (2026): A group practice planning a new office buildout in 2026 can rely on the same $2.5M/$4M structure, with slightly higher indexed amounts. That predictability makes it easier to align large equipment purchases with cash flow and expansion plans.

What Dental Equipment Qualifies for Section 179?

The IRS is surprisingly generous with what counts as qualifying equipment under Section 179. Both new and used items qualify—as long as they’re new to your practice. Refurbished digital imaging systems and pre-owned dental chairs, for example, are fully eligible.

Equipment that qualifies includes:

• Digital imaging systems: CBCT scanners, panoramic X-ray machines, intraoral cameras, digital sensors

• Patient care equipment: Dental chairs, operatory units, delivery systems, surgical equipment

• Sterilization and safety equipment: Autoclaves, air purification systems, protective barriers

• Computer hardware and software: Off-the-shelf practice management software, computers, tablets, digital scanners

• Office and facility equipment: Reception furniture, filing systems, security systems

What doesn’t qualify:

• Real estate improvements: Building additions or structural changes (though certain interior improvements may qualify separately)

• Personal use items: Any equipment used less than 50% for business purposes

• Inventory and supplies: Items purchased for resale or routine clinical use (like composites, burs, or gloves)

Note: The 50% business-use rule matters. If you buy a laptop that doubles as a family computer half the time, only 50% of the cost qualifies for Section 179.

Caroline’s insight: “I’ve had dentists assume that only ‘big-ticket’ equipment qualifies, but even smaller purchases like operatory chairs or sterilizers count. In fact, bundling several medium-sized purchases in the same year can add up to a major deduction.”

How Section 179 Works with Bonus Depreciation

Section 179 isn’t the only way to accelerate deductions. The 2025 law also made 100% bonus depreciation permanent. The two provisions work together, but the IRS requires they be applied in order:

1. Apply Section 179 first (up to $2.5M in 2025, with inflation adjustments beginning in 2026).

2. Apply 100% bonus depreciation to any remaining qualifying equipment costs.

3. Use regular depreciation only if there’s anything left.

Example: If a dental group invests $3 million in equipment in 2025:

• The first $2.5 million is deducted using Section 179.

• The remaining $500,000 is deducted immediately using 100% bonus depreciation.

• Total: the full $3 million is written off in year one.

This combination is especially powerful for larger or multi-location practices making major investments.

Forward-looking planning: In 2026 and beyond, dentists can count on this same structure—full Section 179 expensing plus 100% bonus depreciation—making it easier to time purchases around cash flow instead of rushing every December.

Caroline Nguyen suggests: “Think of Section 179 as the scalpel and bonus depreciation as the suction—they work best together. Section 179 gets you the bulk of the deduction, and bonus depreciation cleans up the rest, so nothing is left on the table.”

Why Use Section 179 Instead of Bonus Depreciation?

Bonus depreciation often looks like the easier choice—it’s unlimited, it isn’t capped by income, and it can create a loss that offsets other income. So why would a dentist ever elect Section 179 instead?

• Flexibility. Section 179 lets you choose which assets to expense and how much. Bonus applies automatically to all qualifying property in a class unless you elect out (e.g., 5- or 7-year property).
  
  

• Entity-level elections. For S corporations and LLCs taxed as partnerships, Section 179 is elected at the entity level before it flows through to owners. That allows more targeted planning than bonus.
  
  

• State conformity. Some states don’t allow bonus depreciation but do allow Section 179 (sometimes with reduced limits). In those states, Section 179 may be the only way to get an immediate deduction.
  
  

• Income management. Section 179 stops at business income, which can actually help dentists who don’t want to show a loss—for example, when applying for financing or maximizing retirement contributions.
  
  

• Eligible property. Section 179 covers certain software and qualified improvements to dental office interiors that bonus depreciation doesn’t always apply to.

As Caroline Nguyen, CPA, often explains, bonus depreciation is the hammer while Section 179 is the scalpel—one provides speed, the other precision. The strongest dental tax plans typically use both.

Timing Requirements You Can't Ignore

To claim Section 179 (or bonus depreciation), equipment must be purchased and placed in service by December 31 of the tax year.

“Placed in service” means ready for patient care—not just delivered. If your new CBCT scanner arrives on December 30 but isn’t calibrated and operational until January 3, it won’t count for the 2025 deduction.

This rule creates a year-end crunch. Dental suppliers and installers get swamped in the fourth quarter as practices rush to qualify. Waiting until late November to order is risky.

Example: Dr. Patel ordered four new operatories in September 2025. Because she locked in early, her installation was complete by December 15, allowing her to claim the full deduction in 2025. A colleague who waited until December didn’t get her chairs installed until January 2026—and missed out on a year of deductions.

Financing doesn’t delay deductions. Whether you pay cash or finance equipment, you can deduct the full amount in the year it’s placed in service.

Caroline Nguyen points out: “Every December I see dentists scrambling to get equipment installed before year-end. The practices that plan in the fall avoid the stress and have their deductions secured without a last-minute rush.”

Income Limitations That Trip Up Practice Owners

Section 179 has one important limitation: it can’t create a loss. You’re only allowed to deduct up to the amount of your practice’s taxable business income for the year.

That means Section 179 cannot be used to wipe out 

• W-2 wages earned by a spouse, or

• income from another business you own.

If your dental practice shows $200,000 in taxable income, your Section 179 deduction is capped at $200,000—even if you purchased $400,000 of equipment. The extra $200,000 doesn’t disappear; it carries forward until your practice generates enough income to use it.

This is where bonus depreciation makes a difference. Bonus depreciation has no income limitation, so it can create or increase a business loss in the current year—something Section 179 can’t do. That loss can then offset other household income, and if the total loss is bigger than your combined income, the extra becomes a net operating loss (NOL) that carries forward.

Example: Dr. Sarah’s practice earned $150,000 in taxable income in 2025. She invested $250,000 in new sterilization equipment and digital scanners. Her spouse also earned $200,000 in W-2 wages.

• She deducted $150,000 under Section 179 (limited by her practice income).

• She deducted the remaining $100,000 under bonus depreciation, creating a $100,000 business loss.

• That $100,000 loss offset part of her spouse’s W-2 income, reducing their joint taxable income.

• If the loss had been larger than their combined income, the excess would carry forward as an NOL to future years.

How to Claim Section 179 (Form 4562 & Documentation)

Claiming Section 179 isn’t automatic—you need to report it on your tax return using IRS Form 4562, Depreciation and Amortization. That’s where the election is made to expense your qualifying equipment instead of depreciating it over several years.

Your CPA will handle the form itself, but the supporting documentation is on you. Keep these items organized:

• Purchase agreements and invoices showing equipment costs

• Installation and delivery records proving the date the equipment was placed in service

• Usage logs if the equipment has any personal use component (e.g., a laptop)

• Financing agreements, if the equipment was financed instead of purchased outright

The IRS expects to see not just proof of purchase but also proof of when the equipment was operational.

Caroline Nguyen cautions: “In an audit, the IRS usually doesn’t argue about whether a CBCT scanner is dental equipment. They argue about when it was placed in service and whether the documentation backs that up. That’s why I tell dentists to keep the delivery and installation records with the invoice—it saves a lot of headaches later.”

Strategic Considerations for Multi-Location Practices

For dentists with more than one office, Section 179 gets tested twice: first at the entity level, then again at the individual level.

• Entity level. Each LLC, S corporation, or partnership makes its own Section 179 election. The $2.5M cap and income limit apply within that entity before any deduction passes through.
  
  

• Individual level. Owners then aggregate all Section 179 deductions flowing from every entity they own (plus any sole proprietorships). At this stage, the $2.5M cap and taxable income limit apply again across the combined total.

One important wrinkle: once a Section 179 election is made at the entity level and reported on a K-1, the owner can’t swap it for bonus depreciation. The election sticks, even if the deduction is limited at the personal level. That’s why entity-level planning matters—choosing between Section 179 and bonus depreciation must be made before the K-1 is issued.

Strategic planning tip: If one entity (such as a single-member LLC) is expected to show lower income, bonus depreciation may be the better tool because it can create or increase a loss, while Section 179 would get stuck and carried forward.

Example: Dr. Lopez owns three LLCs taxed as S corporations. Each makes a Section 179 election on its equipment purchases. On Dr. Lopez’s personal return, those amounts are combined and capped at $2.5M, limited further by his aggregate active business income. Because the election was made at the entity level, Dr. Lopez cannot reclassify any of those deductions as bonus depreciation.

Caroline Nguyen points out: “Dentists often don’t realize that once Section 179 flows through on a K-1, it’s locked in. You can’t change it to bonus depreciation at the individual level. That makes it critical to decide at the entity stage whether Section 179 or bonus depreciation creates the best outcome.”

Common Section 179 Mistakes That Cost Money

Even with the expanded limits, dentists still miss deductions because of avoidable mistakes:

• Confusing deductions with free money. A deduction only saves cents on the dollar. Spending $200,000 on equipment might save $70,000 in taxes, but it’s still a $200,000 investment—make sure the purchase also supports practice growth.
  
  

• Missing the December 31 deadline. Equipment delivered in December but not installed and operational until January doesn’t count for that year.
  
  

• Mixing up Section 179 and bonus depreciation. They work together, but they’re not the same. Bonus depreciation can create a loss; Section 179 can’t.
  
  

• Overlooking income limitations. Section 179 stops at taxable business income—unused amounts carry forward but don’t offset other household income in the current year.
  
  

• Assuming multiple entities multiply the limit. The $2.5M cap applies at the individual level, even if you own several LLCs or S corporations.
  
  

• Not planning before K-1s are issued. Once a Section 179 election is made at the entity level, owners can’t switch it to bonus depreciation on their personal return.

  
  

• Poor documentation. Without invoices, installation records, or usage logs, deductions can be disallowed in an audit.

Making Section 179 Work for Your Practice Growth

Section 179 isn’t just about tax savings—it’s about aligning equipment purchases with practice growth. The most valuable investments both improve patient care and strengthen cash flow.

A $75,000 sterilization system or a full operatory buildout, for example, can immediately improve efficiency and patient experience while generating an upfront deduction. Just remember: a deduction only saves cents on the dollar. Spending $75,000 might save $25,000 in taxes, but it’s still a $75,000 investment—the real payoff comes when it also drives practice growth.

Caroline Nguyen reminds, “The real power of Section 179 is when tax savings and practice growth overlap. That’s when the deduction works twice—lowering taxes today and boosting revenue tomorrow.”

Working with Your Tax Professional

Healthcare practices have unique considerations that generic tax advice misses.

Your tax professional should understand medical practice finances, equipment depreciation for healthcare, and how practice growth affects entity structure decisions. They need to coordinate Section 179 planning with your practice's cash flow, expansion plans, and long-term tax strategy.

A good CPA will:

• Coordinate Section 179 with bonus depreciation so nothing gets wasted

• Review whether entity-level elections (especially for S corps and LLCs) make sense

• Check how purchases fit with your cash flow and expansion plans

If your current tax preparation focuses only on compliance without strategic equipment planning, you might be missing opportunities.

Caroline Nguyen shares, “When I sit down with dentists, I’m not just asking what equipment they want. I’m asking how that purchase affects cash flow, expansion goals, and whether Section 179 or bonus depreciation gives the better result. The tax forms are the easy part—the strategy is where the value is.”

Next Steps for Your Practice

Don’t wait until December to think about Section 179. Vendors, installers, and CPAs all get swamped at year-end. Planning early gives you better service and ensures you don’t miss deadlines.

Here’s what to do now:

1. Review your equipment needs for 2025 and 2026.

2. Get quotes and installation timelines from vendors.

3. Discuss with your CPA how Section 179 and bonus depreciation fit into your overall tax plan.

4. Stay current with IRS guidance—start with IRS Form 4562 and IRS Publication 946 (How to Depreciate Property).

With the higher Section 179 limits now permanent, you have more flexibility than ever. Used wisely, this deduction helps you reinvest in your practice, improve patient care, and keep more of what you earn.

Learn more about Town's specialized tax services for healthcare practices and see how our dental practice specialists help practices optimize equipment investments and tax strategies year-round.

Disclaimer: This content is for educational purposes only and does not constitute personalized tax advice. Tax laws are complex and subject to change. Individual circumstances can vary significantly, and strategies that work for one taxpayer may not be suitable for another.