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ADA believes tax bill will benefit majority of dentists

December 20, 2017

Washington — The House and the Senate on Dec. 20 passed the Tax Cuts and Jobs Act, legislation that revamps the U.S. tax code for the first time in more than 30 years. 

The ADA was successful in getting a number of ADA policy priorities included in the final bill, which it believes will benefit the majority of dentists. President Donald J. Trump signed the bill on Dec. 22.

In an email to members, the Association thanked dentists for their significant outreach on this issue.

“Advocacy efforts were instrumental in ensuring that the tax provisions that would benefit dentists were specifically considered in the development of the final tax bill,” said Mike Graham, ADA senior vice president of government and public affairs. Mr. Graham underlined the importance of all dentists determining their own level of benefit from the final bill since numerous factors — including geographic location, property ownership and family structure — will play a role in determining an individual’s bottom line tax benefit.

“Although we acknowledge the positive aspects of the tax bill for the majority of our dental practices, we are aware that there may also be unintended policy outcomes from this legislation,” Mr. Graham said. “We will work to ensure that dental practices and the patients they serve are not harmed by these unintended policy outcomes.”

He added that the Association will continue to advocate for a five-year reauthorization of the Children’s Health Insurance Program, Action for Dental Health programs, student loan issues and funding for community health centers.

“Those efforts will continue to be among our advocacy priorities in 2018,” he said.

Here are the key provisions from the final bill that the ADA believes will most positively affect a majority of dental practices. They are: 

  • Improving the cash accounting allowance by allowing corporations and partnerships with corporate partners with average gross receipts up to $25 million to use cash accounting. This would also allow farm corporations and partnerships with gross receipts of up to $25 million to use cash accounting. Eligible businesses could use cash accounting even if they had inventories.
  • Improving Section 179 deductions by expanding businesses’ ability to immediately expense some of the costs of qualifying property such as off-the-shelf computer software and some real property. Currently, $500,000 can be expensed unless more than $2 million in property is bought. Under the final tax bill, as much as $1 million could be expensed and expensing would be expanded to include furniture, as well as nonresidential roofs, heating and air conditioning systems, and fire and alarm systems.
  • Retaining the student loan interest deduction at its current levels. The bill also maintains current tax law in that graduate students do not have to pay a tax on the tuition they receive as income from educational institutions. Previous versions of the bill had proposed a tax on that income.
  • Providing the first ever deduction for all pass-through entities, including S Corporations and sole proprietorships. The deduction is extended to certain professional service businesses, including dentist practices. It would only be fully available for service businesses with annual incomes of $157,500 or less for individual filers or $315,000 for joint/married filers and would phase out for incomes greater than those thresholds.

Visit ADA Engage and subscribe to ADA Action Alerts to stay informed on critical public policy issues and to get connected with your legislators. Maintained by the American Dental Political Action Committee, ADA Engage allows new dentists to be heard and advocate in Washington.

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