Why your supply number is probably wrong
Most practices I talk to have one line on the P&L for everything they buy from a dental distributor: Dental Supplies. Gloves, composite, a new autoclave, a handpiece repair, toner, CEREC blocks. It all goes in the same bucket because the check went to the same vendor.
That single habit causes three problems. Your supply percentage looks worse than it is, so you chase savings in the wrong place. Lab and repair costs disappear inside it, so you never see them growing. And equipment that should be depreciated or written off under Section 179 gets expensed as a consumable. Your fixed-asset list stops matching what’s in your operatories, and your CPA has to untangle it at year-end instead of planning around it.
The categories, and what goes in each
Split distributor spend into these seven lines. The benchmarks are rough comparison points as a percent of collections; your specialty and case mix will move them.
↔ On smaller screens, swipe to see all table columns.
Two of these come straight from experienced dental CPAs. Dental Economics has long advised that CEREC costs belong in lab fees, not supplies, and that computers and office furniture should never land in the office supply account (Dental Economics). Supply and lab ranges are the ones we use in our overhead benchmarks guide.
The tax rules that decide supplies vs. equipment
Where a purchase lands isn’t just a bookkeeping preference. Five federal rules decide whether it’s deducted now, deducted when used, or capitalized. All figures below are for tax years beginning in 2026.
Materials and supplies (Treas. Reg. §1.162-3).
An item counts as a supply if it costs $200 or less per unit or has an economic useful life of 12 months or less. Supplies you track with consumption records are deducted when used; supplies you don’t track are deducted when bought (26 CFR §1.162-3). Most clinical consumables fall here.
De minimis safe harbor (Treas. Reg. §1.263(a)-1(f)).
Without audited financial statements, you can elect to expense tangible property costing up to $2,500 per item or per invoice line; the limit is $5,000 with audited statements. The election is an annual statement attached to a timely filed return, it applies to every qualifying purchase that year, and the item must also be expensed on your books (explainer). This is why a $1,800 curing light can go to Small equipment rather than the asset list.
Section 179.
For 2026 you can elect to expense up to $2,560,000 of qualifying equipment. The limit shrinks dollar for dollar once total equipment placed in service passes $4,090,000 (IRS Publication 946). The equipment must be installed and usable by December 31, not just ordered. The deduction can’t exceed business taxable income; the excess carries forward. It’s claimed on Form 4562, and not every state follows the federal limits.
Bonus depreciation.
The 2025 tax law (OBBBA) made 100% bonus depreciation permanent for qualifying property acquired after January 19, 2025, with no dollar cap. It applies after any Section 179 amount and covers new and used equipment (summary). For most practices, the practical result is the same as 179: a new chair or scanner can be fully deducted in year one. Your CPA picks which tool to use.
Repairs vs. improvements.
A repair that keeps equipment working is deducted now. Work that betters the asset, restores it from a broken or worn-out state, or adapts it to a new use (the “BAR” test) must be capitalized. Routine maintenance you expect to repeat more than once during the asset’s class life is safe-harbored as a deduction (Journal of Accountancy). A handpiece turbine swap is a repair. Rebuilding a chair’s hydraulics and upholstery to like-new may not be.
The allocation process, step by step
Common miscodes and how to fix them
These are the lines I see buried in Dental Supplies most often. The examples assume a $2,500 capitalization threshold.
↔ On smaller screens, swipe to see all table columns.
For the current year, each fix is a simple reclass entry: debit the correct account, credit Dental Supplies, with the invoice number in the memo. Do it monthly, so your year-end package is clean before it reaches your CPA.
For prior years, don’t reclass on your own. A capital item that was expensed in a closed year is your CPA’s call. Often nothing needs to change, and sometimes it does.
Year-end checklist
Before you send the year to your CPA, run through this list:
This article is general information, not tax or accounting advice. Rules and limits change, and your CPA should confirm how they apply to your practice. Tax figures checked October 2026.
Sources
References cited in this article:
