Every year, the tax threshold is adjusted by the IRS, taking inflation into account. In the coming year of 2026, a number of changes are likely to have an impact on dental practices and how their owners plan financially, as well as manage their tax liability.
Seeking year-round guidance and advice from dental practice accountants can help you deal with these, but in the meantime, let’s look in a little more detail at some of the changes likely to affect dental practices throughout the U.S.:
Expansion of income tax brackets
Although tax rates won’t change for 2026, the thresholds for income are heading in a northerly direction. Increasing by around $475-$950 depending on your status when filing, are lower tax brackets, while expanding by up to $17,000, are higher tax brackets.
Ultimately, this means that for incomes which have remained stable, a modest reduction in effective tax rate may be observed, as more income falls into lower brackets. If you’re a dental practice owner who draws a salary and distributions, there will be extra opportunities for flexibility during tax planning.
Standard deduction increases
Climbing still thanks to the inflation-index, the standard deduction is at:
- Married and filing jointly: $32,200
- Head of household: $24,150
- Single or married filing separately: $16,100
If you’re a dentist or oral surgeon who goes down the simplistic route as opposed to itemizing, you’ll be rewarded with tax relief that’s straightforward, without any of the hassle of extra paperwork.
Rise in capital gains threshold
Holding steady at 0%, 15%, and 20%, are long term capital gains, but note that for each bracket, income thresholds are ascending, creating tax-efficient asset sales opportunities.
For dentists with investments outside of your practice, such as brokerage accounts or real estate, you might be able to benefit from more gains before you hit the next tier of taxes. However, timing really matters for this, particularly as dentists near retirement or are considering restructuring their portfolio of investments.
No changes to family credits
At $2,200 per qualifying child and up to $1,700 refundable, the Child Tax Credit remains unchanged. For single filers, phaseout thresholds are also unchanged at $200,000, with $400,000 for couples that are married.
If you’re a dentist planning to expand your family through adoption, there is a small increase to $17,670 in the adoption credit, with $5,120 refundable, that may prove to be a helpful adjustment.
Historically high exemption levels continue
Increasing permanently to $15 million per person, the unified gift and estate tax exemption is ring marked for inflation moving forward. The annual gift exclusion per recipient holds at $19,000.
If you’re a dentist with your own practice and are considering a strategy for wealth transfer or succession, exemption levels that have remained historically high, still present a compelling opportunity. If you’re structuring a buyout, or shifting ownership to a member of the family, accountants for dental practices could talk you through your options.
While these cost of living adjustments for 2026 may be modest, they still offer a degree of relief for professionals in the dental industry, and working with a specialist dental accountant as we approach 2026, can help ensure that you take full advantage of them.