Dental Equipment Depreciation: Section 179, Bonus Depreciation, and What to Expense First

A single operatory buildout, a CBCT unit, or a CAD/CAM system can each cost as much as a house down payment, and dental practices buy several of these in the same year with some regularity. The tax code has two separate mechanisms that let almost all of that cost come off taxable income in year one instead of over a five or seven year depreciation schedule, and the two mechanisms interact in ways that aren’t obvious from either one’s rules read on its own. This guide covers how Section 179 and bonus depreciation under IRC 168(k) work for dental equipment specifically, which recovery period applies to which piece of equipment, and how to sequence the two elections when a practice buys more than one big-ticket item in the same year.

What’s Section 179 and how much can you expense?

IRC 179 lets a business elect to deduct the full cost of qualifying tangible personal property in the year it’s placed in service, instead of depreciating it over its MACRS recovery period. The One Big Beautiful Bill Act permanently raised the baseline limit to $2.5 million, and for tax years beginning in 2026, the inflation-adjusted limit under Revenue Procedure 2025-32 is $2,560,000, with the deduction phasing out dollar for dollar once total qualifying purchases for the year exceed $4,090,000. For essentially every dental practice, even one buying a CBCT unit, a CAD/CAM system, and a full operatory buildout in the same year, total equipment purchases stay well under the phase-out threshold, so the practical cap that matters is the taxable income limitation covered further down, not the dollar limit itself.

Section 179 applies to new and used equipment, as long as the equipment is acquired from an unrelated party and used more than 50% for business. It’s an election made asset by asset (or by asset class) on Form 4562, which gives a practice some flexibility that bonus depreciation, covered next, doesn’t offer in the same way.

How does bonus depreciation work after OBBBA?

Bonus depreciation under IRC 168(k) went through several changes over the last decade, and it’s worth being direct about where it stands now, because a lot of the tax planning content still in circulation describes a phasedown that no longer applies. Under the Tax Cuts and Jobs Act, bonus depreciation was on a declining schedule that would have reduced it to zero by 2027. The One Big Beautiful Bill Act, signed July 4, 2025, permanently restored the rate to 100% for qualified property acquired and placed in service after January 19, 2025, with no scheduled reduction and no expiration date. If you’ve heard that bonus depreciation is phasing down toward zero over the next few years, that description reflects the pre-OBBBA law and is no longer accurate.

There’s one narrow transition rule worth knowing about even though it affects very few practices going forward: OBBBA allowed a taxpayer to elect a 40% rate instead of 100% specifically for property placed in service during the taxpayer’s first tax year ending after January 19, 2025, generally a 2025 filing-year election. For any equipment placed in service in 2026 or later, that transition election isn’t available, and the rate is simply 100%.

Unlike Section 179, bonus depreciation has no dollar cap and no taxable income limitation. It applies automatically to qualifying property with a MACRS recovery period of 20 years or less (which covers effectively all dental equipment) unless the practice affirmatively elects out of it for a given asset class. Because there’s no income limitation, bonus depreciation can create or increase a net operating loss, which matters most for a practice in its first year or in a year with an unusually large capital outlay relative to revenue.

Should I use Section 179 or bonus depreciation first?

For a profitable, established practice, this question is mostly academic: both mechanisms produce the same outcome, a full deduction in the year the equipment is placed in service, so which one gets used first rarely changes the total tax bill. But there are three situations where the distinction matters and the ordering becomes a real planning decision.

The first is the taxable income limitation. Section 179 cannot reduce taxable income from the trade or business below zero; any amount that would create a loss carries forward to future years instead of being used immediately. Bonus depreciation has no such ceiling. A startup practice or one making a large capital investment in a year when revenue hasn’t caught up should generally lean on bonus depreciation for the equipment that would otherwise be limited, since the deduction isn’t wasted waiting for future income.

The second is state conformity. Not every state follows the federal bonus depreciation rules. California is the clearest example: it doesn’t allow bonus depreciation at all but does permit its own, much smaller Section 179 deduction (capped well below the federal figure). A California practice that runs a $200,000 CBCT purchase entirely through federal bonus depreciation gets no matching California deduction that year and instead depreciates the asset over its ordinary MACRS life for state purposes. In a non-conforming state, it’s often worth allocating Section 179 deliberately to the assets that produce the best state-level deduction and letting bonus depreciation cover the rest, rather than defaulting entirely to bonus depreciation because it’s calculated automatically.

The third is precision and flexibility. Section 179 is elected asset by asset (or in defined groups), which lets a practice fine-tune exactly how much gets expensed in a given year, useful when income is close to a bracket threshold or when a practice wants to preserve some depreciation to offset income in a future year. Bonus depreciation is elected (or elected out of) by entire MACRS class, an all-or-nothing choice for every asset placed in service that year within that class. When a practice wants surgical control over the deduction amount, Section 179 offers it; when the practice simply wants everything expensed immediately and has the taxable income to support it, bonus depreciation does the job with less paperwork.

What MACRS recovery period applies to dental equipment?

For any equipment that isn’t fully expensed under Section 179 or bonus depreciation, whether by choice or because of the taxable income limitation, the remaining basis depreciates under the Modified Accelerated Cost Recovery System over the asset’s assigned recovery period. Dental equipment splits mainly across two classes, with a few exceptions worth knowing about specifically because of how often they come up.

Seven-year property covers most of the equipment that defines a dental operatory: dental chairs, delivery units and operatory lights, sterilization autoclaves, compressors and vacuum systems, and CAD/CAM milling units, all classified under the general equipment catchall (Asset Class 00.11) because there’s no more specific asset class that fits them. A CBCT scanner, despite its price tag, falls into this same 7-year category as an imaging system, the recovery period doesn’t scale with the cost of the equipment.

Five-year property covers the computer-driven components: digital sensors, intraoral cameras, and the computer hardware that runs practice management and imaging software, classified under Asset Class 00.12. This distinction occasionally matters on a CAD/CAM purchase, where the milling unit itself is 7-year property but a separately itemized computer workstation or scanner wand on the same invoice can be 5-year property. It rarely changes the bottom-line deduction when Section 179 or bonus depreciation is expensing the whole purchase anyway, but it matters if any portion of the purchase is being depreciated on the ordinary schedule instead.

Two more categories come up specifically around a buildout or renovation. Qualified improvement property (QIP), which covers interior improvements to a leased or owned nonresidential building such as built-in cabinetry, wall and flooring finishes, and other structural elements of an operatory buildout, is 15-year property and is itself bonus-depreciation eligible. Freestanding cabinets and casework that aren’t permanently affixed to the building are ordinary 7-year personal property instead. And if the practice owns the building outright, the building itself and its structural components (roof, HVAC as a building system, plumbing, wiring) are 39-year property, unless a cost segregation study reclassifies specific components into shorter-lived classes.

What does this look like for actual equipment purchases?

How does the taxable income limit affect startups?

The scenario where the Section 179 versus bonus depreciation distinction stops being academic is a new practice in its first year, or an established practice making an unusually large capital investment relative to current revenue.

Does state conformity change the calculation?

Yes, and it’s worth checking before assuming the federal number is also the state number. Beyond California’s non-conformity with bonus depreciation, several other states decouple from federal bonus depreciation rules entirely or impose their own dollar caps on Section 179 that are lower than the federal figure. A practice operating in a non-conforming state ends up filing two different depreciation schedules: the federal return reflects the full 100% bonus depreciation deduction, while the state return depreciates the same assets over their ordinary MACRS life, or applies the state’s own smaller Section 179 allowance first. This isn’t a mistake or a missed opportunity; it’s simply how non-conforming states handle federal accelerated depreciation, and a practice’s tax preparer needs to track two separate depreciation schedules for the life of the asset when this applies.

What should I do next?

Confirm your state’s conformity to federal bonus depreciation before assuming a large equipment purchase produces the same deduction on both returns. If your practice is profitable and comfortably above the equipment spend for the year, the ordering between Section 179 and bonus depreciation usually doesn’t change your bottom-line federal deduction, current law gives you 100% bonus depreciation with no cap either way. If your practice is in a startup year or a heavy capital-investment year relative to revenue, lean on bonus depreciation for the assets that would otherwise be limited by Section 179’s taxable income floor.

If you’re weighing a major equipment purchase as part of opening a new practice versus buying an existing one, the deduction treatment differs in ways that go beyond depreciation: see dental practice startup costs, new practice versus acquisition for how pre-opening costs, acquired equipment, and organizational costs are each treated differently. And if a major equipment refresh is happening because you’re preparing the practice for a sale, or because you just bought one, dental practice valuation and sale covers how the purchase price allocation under IRC 1060 treats equipment differently from goodwill on both sides of the transaction. For how the entity structure holding this equipment affects the S-corp salary and taxable income figures used throughout this guide, see S-corp vs PLLC vs sole prop for a dental practice.

Related guides:

• Dental Associate Compensation Buy In Tax Treatment
• Dental Dso Management Agreement Tax Implications
• Dental Hygienist Classification W2 1099 Independent Contractor
• Dental Practice Bookkeeping Overhead Benchmarks
• Dental Practice Entity Structure Llc Scorp Partnership

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.