As with any tax bill, Trump’s new one can be tough to understand and downright unclear at times, if you’re not familiar with tax jargon. Due to their role in the buying and selling process, you could contact a dental transitions firm who is likely familiar with the new taxes. They can help you narrow down the most important implications of the new system.
Here’s how the new bill affects non-high-income dentists, dental employees, and dental groups.
For independent dentists that file less than $207,500 as a single filer, or no more than $415,000 as a married double healthcare professional household, the new bill comes as a welcome relief. The Tax Cuts and Jobs Act states that these owners will receive a 20% deduction on their taxable income. This cut will drop their effective tax rate a full 10%.
The purpose of this break is to help small town dentists maintain a profitable business. The unfortunate imbalance in the new bill is that dentists who earn above the income line receive no break from the new bill, while people like high-earning real estate investors still do. All-in-all, it doesn’t get worse for either income dentist, but lower earning dentists receive a larger break.
Unfortunately, employees of dental offices are not directly receiving a tax break under the new bill. However, this does not mean that there will be absolutely no benefits for them. They could receive some increased benefits as a trickle-down effect of the tax break for their practice owners.
Some believe that with the new breaks for dentists in smaller communities, they will be able to provide additional benefits or increased salaries. This will be on a case-by-case basis, but many dentists wish they could do more for their employees, and this could free up some additional funds to do so.
As stated earlier, this bill seems to be more focused on helping smaller players in the dental game. This means that there will be no break for groups or large partnerships. The idea is to encourage dentists to stay independent if possible.
Tina Hogeman, the chief financial officer at the Medical Group Management Association, believes that this isn’t large enough of an incentive to not join a group. She stated, “There are too many other factors in what’s going on in the healthcare industry that would play a bigger role in their decision.” While this is an appreciated relief for independent doctors, the percentage of them probably won’t increase.
While tax changes may or may not affect your practice, it’s important to understand what implications any governmental changes may have on your business. Use this information to adjust your budgeting for welcomed cuts or continue business as usual knowing your practice is unaffected.
If you would like more advice on practice management or how to sell your practice, US Dental Transitions is here for you. Founded by dentists, we have successfully helped thousands of dentists in the sale and purchase of practices. Contact us today at 678-482-7305 or info@goUSDT.com to get started!