For the 2026 tax year, Section 179 lets a dental practice deduct up to $2,560,000 of qualifying equipment in the year it is placed in service. The deduction phases out dollar-for-dollar once total qualifying purchases exceed $4,090,000, and disappears entirely at $6,650,000.
The reason this matters to a financed purchase: the deduction is based on the full purchase price, not on what you paid down. Finance $120,000 of equipment with little or nothing out of pocket, place it in service before December 31, and the whole $120,000 is deductible that year. By then you will have made only a few loan payments.
The constraint is timing, not credit. Five West funds nationwide with same-day options on qualified files, so a December install is never waiting on a lender.
What is Section 179, and how much can a dental practice deduct in 2026?
Section 179 of the Internal Revenue Code lets a business expense the cost of qualifying equipment immediately rather than depreciating it over its useful life. Dental equipment falls in the 5-year MACRS class, so without the election you would recover the cost over six tax years. With it, you take the deduction now.
The 2026 figures, set by IRS Rev. Proc. 2025-32:
- Maximum deduction: $2,560,000, up sharply from $1,250,000 in 2025.
- Phase-out begins at $4,090,000 of qualifying property placed in service during the year, reducing the deduction dollar-for-dollar above that figure.
- Fully phased out at $6,650,000.
- 100% bonus depreciation is permanent under the One Big Beautiful Bill Act, for property acquired and placed in service after January 19, 2025.
For all but the largest DSO-scale buyers, the cap is not the binding constraint: a solo practice equipping three operatories is nowhere near $2.56 million. What binds instead is the taxable income limitation, covered further down.
How does Section 179 work when you finance the equipment?
This is the mechanism that makes financing and Section 179 work well together, and it is worth stating plainly because it surprises people:
The deduction follows the purchase price of the asset and the date it is placed in service. How much cash you have paid the lender does not enter into it. The IRS treats a financed purchase as a purchase. You own the equipment, you owe the debt, and the full basis is deductible in year one if you elect it.
So a practice that finances $120,000 of equipment in October and makes three payments before year end has spent roughly $7,473 in cash on that equipment, and may still deduct $120,000.
A worked example: $120,000 operatory, financed
Assume a $120,000 equipment package financed over 60 months at 9% APR and placed in service in October 2026, with a combined federal and state marginal rate of 32%. Your actual rate will differ; this is arithmetic, not advice.
Illustrative. Assumes sufficient taxable income to absorb the deduction and that the equipment is operational by December 31.
At other marginal rates the same $120,000 deduction is worth about $28,800 at 24% and $44,400 at 37%.
The part most articles leave out
Section 179 is a timing benefit rather than free money. You are accelerating into a single year a deduction you would otherwise have taken across six. That is genuinely valuable, since a dollar deducted today is worth more than a dollar deducted in 2031 and can fund the down payment on the next thing. But it has a back end.
In years two through five of that loan you will make roughly $29,892 in annual payments and have no remaining depreciation deduction on that equipment. What you will still deduct is the interest, which is a separate business interest expense: about $29,460 in total interest across the 60-month term in the example above, front-loaded.
Practices that take a large Section 179 deduction in a strong year and then face flat income in following years sometimes find the later years tighter than they expected. None of that argues against the election; it argues for making it deliberately, with your CPA, rather than reflexively every December.
Section 179 vs. 100% bonus depreciation: which comes first?
Both let you write off equipment immediately in 2026, and they interact. The general ordering most CPAs use is Section 179 first, then bonus depreciation on whatever basis remains. The differences that matter:
- Income limitation. Section 179 cannot exceed your net active business income, so it cannot create or deepen a loss. Bonus depreciation can.
- Carryforward. Section 179 amounts disallowed by the income limit carry forward indefinitely. Bonus has no such cap to begin with.
- Selectivity. Section 179 can be applied asset by asset, and partially. Bonus applies to an entire asset class unless you elect out.
- State conformity. Many states cap or decouple from federal Section 179 and bonus rules. This is where a national article stops being useful and your CPA starts.
What dental equipment qualifies?
Tangible personal property used more than 50% in the business generally qualifies. In a dental practice that typically covers:
- Chairs, delivery systems, operatory lights, and stools
- Digital sensors, intraoral cameras, panoramic units, and CBCT scanners
- CAD/CAM mills and intraoral scanners
- Sterilizers, autoclaves, compressors, and vacuum pumps
- Cabinetry and operatory casework
- Practice management and imaging software
- Office furniture, computers, and networking hardware
Used equipment qualifies too. The asset has to be new to you, not new to the world. A chair bought from a retiring dentist is eligible on the same terms as one off a dealer floor. Real property and most leasehold improvements follow different rules; check the specific improvement with your CPA.
What does “placed in service” mean, and why does December 31 matter?
Placed in service means the equipment is installed, operational, and available for its intended use. Ordered, paid for, or sitting in a crate in the hallway does not count. A CBCT delivered December 28 and commissioned January 6 is a 2027 deduction.
This is the single most common Section 179 mistake in dentistry, and it is entirely avoidable. If the deduction is part of your plan for the current tax year, work backward from December 31 through installation, calibration, and any required inspection, and start the financing conversation early enough that funding is not the thing holding up delivery.
The taxable income limitation
Section 179 is capped at your net active business income for the year, so you cannot use it to create or increase a loss. For an established practice with solid collections this rarely binds. Two situations where it often does:
- Startup practices. A first-year practice with heavy buildout costs and light collections may not have the income to absorb a large deduction. The disallowed amount carries forward, and bonus depreciation, which has no income limit, may be the better tool.
- Acquisition years. A practice purchase can compress income enough that a big equipment election exceeds what is available.
Does leasing qualify for Section 179?
It depends entirely on the structure, and the distinction is worth understanding before you sign:
- Equipment loan or $1 buyout lease (capital lease): you are treated as the owner. Generally eligible for Section 179 and bonus depreciation.
- Fair market value operating lease: the lessor owns the asset. You do not take Section 179; you deduct the lease payments as an operating expense instead.
Neither is automatically better. An FMV lease on a CBCT can produce a lower after-tax cost over five years if you intend to return or upgrade the unit; a $1 buyout on chairs and cabinetry you will own for a decade usually wins. What you should not do is assume a lease gives you the deduction without checking which kind you signed.
What happens if you sell or trade the equipment later?
Depreciation recapture. When you sell an asset you fully expensed, gain up to the amount of depreciation taken is generally recaptured as ordinary income under Section 1245. This is not a reason to avoid the election, but it does mean the tax benefit is partly borrowed against a future sale. That matters if you expect to sell the practice or trade up the technology within a few years.
Mistakes that cost dental practices money
- Ordering in December and installing in January. Moves the entire deduction a year.
- Buying equipment you do not need for the deduction. A 32% deduction still leaves 68% of the cost as a real expense. The equipment has to earn its keep on its own.
- Assuming an FMV lease qualifies. It does not.
- Ignoring state conformity. Several states cap the deduction far below the federal limit.
- Forgetting the income limitation in a startup year.
- Taking the full deduction in a low-income year when spreading it across higher-bracket future years would be worth more.
The bottom line
Section 179 and equipment financing fit together well because the deduction follows the purchase price while the cash outlay follows the payment schedule. A practice that finances $120,000 in the fourth quarter can plausibly be cash-positive on the transaction in year one. The discipline is to treat it as a timing tool: elect it deliberately, confirm the income limitation and your state's conformity with your CPA, and make sure the equipment is genuinely operational before December 31 rather than merely delivered.
Get the financing settled early so it is never the thing holding up an install. Five West funds nationwide with same-day options on qualified files; tell us your placed-in-service date and we will work backward from it.
On rates: Any range on this page is illustrative rather than a quote. Your actual rate can come in higher or lower, and it depends on personal and business credit, time in business, the equipment itself, the term you choose, and the size of the transaction. Two files for the same machine can price differently. It is also worth checking the date on anything you read elsewhere. A good deal of the equipment-finance content still circulating was written when prime was 3.25%, and prime is 6.75% today, so if you happen to come across rates like 5% or 6%, it is worth confirming whether the page is current before you plan around it. The surest way to know your number is to let us price your file.
Five West programs at a glance
Section 179 turns on your install date, not your order date, and a slipped commissioning moves the whole deduction into next year. We fund nationwide with same-day options on qualified files, so financing is never the item holding up a December install.
- Rates
- Priced to your credit profile, term, and equipment; competitive with a bank on rate, not on speed
- Terms
- 24 to 84 months, with 10 years on select programs
- Amounts
- $20,000 to $5 million+
- Application only
- Up to $500,000 with no tax returns or financial statements
- Credit
- Established businesses from 600+, startups from 700+
- Equipment
- New, used, refurbished, dealer, and private-party purchases
- Speed
- Same-day options on qualified files, with approvals in as little as a few hours
- Coverage
- Nationwide, U.S. territories, and cross-border
Tell us the placed-in-service date you are working toward and we will build the funding schedule backward from it.
Free consultation, no obligation. All financing is subject to credit approval and underwriting; rates and terms depend on the complete business and credit profile.
Related dental financing guides
More on financing equipment for a dental practice.
Section 179 questions dentists ask
What is the Section 179 deduction limit for 2026?
The Section 179 deduction limit for the 2026 tax year is $2,560,000, up from $1,250,000 in 2025. The deduction phases out dollar-for-dollar once qualifying property placed in service exceeds $4,090,000, and is fully phased out at $6,650,000. Separately, 100% bonus depreciation is permanent for property acquired and placed in service after January 19, 2025.
Can you take Section 179 on financed dental equipment?
Yes. Section 179 is based on the purchase price of the equipment and the date it is placed in service, not on how much of the loan you have repaid. A practice that finances $120,000 of equipment and places it in service in October can generally deduct the full $120,000 that tax year despite having made only a few payments.
Does used dental equipment qualify for Section 179?
Yes. Equipment must be new to your practice, not new to the world. A dental chair, CBCT, or full operatory purchased from another dentist qualifies on the same terms as equipment bought new, provided it is used more than 50% in the business and placed in service during the tax year.
Does leasing dental equipment qualify for Section 179?
It depends on the lease structure. A capital lease with a $1 buyout is treated as ownership and generally qualifies for Section 179 and bonus depreciation. A fair market value operating lease does not: the lessor owns the asset, and you deduct the lease payments as an operating expense instead.
What does 'placed in service' mean for Section 179?
Placed in service means the equipment is installed, operational, and available for its intended use, not merely ordered, paid for, or delivered. Equipment delivered in late December but not commissioned until January is a deduction for the following tax year. This is the most common Section 179 timing mistake in dental practices.
Should I use Section 179 or bonus depreciation?
Most CPAs apply Section 179 first, up to the $2,560,000 cap, then 100% bonus depreciation on any remaining basis. The key difference is that Section 179 cannot exceed net active business income and cannot create a loss, while bonus depreciation has no income limitation and can create or deepen a net operating loss. State conformity varies and should be confirmed with your CPA.
Do I pay tax later on equipment I wrote off with Section 179?
Potentially. If you sell equipment you fully expensed, gain up to the amount of depreciation taken is generally recaptured as ordinary income under Section 1245. This matters most if you expect to sell the practice or trade up technology within a few years of the deduction.
Placing equipment in service before December 31?
Funding timelines matter when the deduction is on the line. Tell us your install date and we will work backward from it.
This article is general information about commercial equipment financing and is not a commitment to finance. All financing is subject to credit approval and underwriting. Rates, terms, and approval depend on the complete business and credit profile. Figures shown are illustrative market ranges gathered from published sources as of August 2026 and are not an offer. Five West Financial is not a tax advisor or an accounting firm; confirm any tax treatment with your CPA before relying on it.