Owning a dental practice is a huge milestone. You’ve worked hard to build your business, care for your patients, and juggle the endless responsibilities that come with running a practice.
But one question keeps popping up: How much should I pay myself?
It’s a delicate balance. After covering employee wages, taxes, rent, and other expenses, how do you decide what’s left for you? Is there a magic formula? And how do factors like your practice’s location, size, and specialty affect your income?
The truth is, determining your salary isn’t as simple as taking what’s left at the end of the month.
It requires careful planning to ensure your practice stays financially healthy while also meeting your personal financial goals.
In this article, we’ll break down everything you need to know about setting the right salary for yourself as a dental practice owner, plus share practical tips to make sure your pay is both fair and sustainable.
The Numbers: What’s the Average Dental Practice Owner Salary?
The best public benchmark comes from the ADA Health Policy Institute’s Survey of Dental Practice. Here is what its 2024 data, the most recent published, shows for general practitioners in private practice:
- Solo owners: $208,220 average, $179,650 median
- Non-solo owners: $234,050 average, $204,370 median
Specialists earn more:
- Solo specialists: $311,650 average, $249,500 median
- Non-solo specialists: $421,880 average, $335,090 median
We give you the median next to the average on purpose. Averages get pulled upward by a handful of very high earners, so the median is usually closer to what you would actually see if you lined up every practice like yours side by side. If your number sits somewhere between the two, you are in normal territory.
These numbers provide a useful starting point but remember: your salary isn’t just your take-home pay.
As a practice owner, your income is a mix of two things:
- Your compensation as a practicing dentist.
- Your share of the practice’s profits.
Before determining your pay, you need to subtract all operating costs (rent, payroll, equipment, insurance, and more) from your gross revenue.
Then comes the tricky part: deciding how much to allocate to yourself versus reinvesting in the business.
Factors to Consider When Setting Your Salary
Setting the right salary isn’t just about pulling a number out of a hat. First, here are some key factors to think about:
Lifestyle Goals
Your personal financial needs (mortgage payments, children’s education, retirement planning) also play a role in determining your salary. Start from what your household actually needs each month rather than from whatever is left in the account at the end of it, then work backward to a number the practice can pay you consistently.
Your Practice’s Financial Health
Every dental practice has unique financial dynamics. A larger, established practice may have more room to pay the owner, while a newer practice might require reinvestment to grow.
Location Matters
Dentists in metropolitan areas like Houston often earn more than those in rural settings due to higher patient volumes and fees. However, urban practices also tend to have higher overhead costs.
Specialty and Experience
Specialists like orthodontists and oral surgeons generally earn more than general dentists, and years of experience can also impact your earning potential.
Tax Implications
The way you structure your income (salary versus dividends or distributions) affects how much you pay in taxes. Striking the right balance is key.
Our Quick Guide To Determining Your Salary
When it comes to setting your salary as a dental practice owner, there’s no “right” or “wrong” number.
It all depends on your practice’s financial health, your personal goals, and your future plans. The key is finding a balance that works for both your business and your lifestyle.
Here are some practical steps to guide you:
1. Maintain a Minimum Cash Reserve
Your practice’s emergency fund is non-negotiable. Calculate your monthly overhead and ensure you always have at least three months’ worth of expenses in reserve. This safety net shields you from unexpected expenses, like equipment repairs or delayed insurance reimbursements, so your salary doesn’t have to take a hit.
2. Factor in Taxes
Payroll taxes apply to every dollar of your salary, but distributions or dividends could be taxed differently depending on how your business is structured. Consulting with an experienced dental CPA can help you find the most tax-efficient way to pay yourself while ensuring you stay compliant.
3. Think About Retirement
If you’re contributing to a retirement plan like a 401(k), there’s a ceiling on how much of your pay the plan is allowed to count. The IRS set that annual compensation limit at $360,000 for 2026, up from $350,000 in 2025. Earn above the limit and those extra dollars simply do not count toward the plan’s formula, so once your salary clears that line, we start looking at where else the money should go.
4. Pay Yourself Based on Lifestyle, Not Ego
If you’ve had a big year, it’s natural to want to reward yourself with a larger paycheck. However, consistency is key. Avoid overpaying yourself during good years or underpaying during slower ones. Instead, aim for a steady income that supports your needs while leaving room to reinvest in the practice.
Bonus: Don’t Fall Into the “Lifestyle Creep” Trap
It’s easy to let your expenses grow as your income rises. A bigger salary might mean a nicer car or a more luxurious home, but these habits can strain both your personal and business finances. Instead, focus on balancing your pay with your practice’s needs. Consider reinvesting extra income into new equipment, hiring additional staff, or expanding your office. You’ll thank yourself in the long run.
How To Structure Owner Pay: Salary, Distributions, And Draws
How you take money out of the practice matters as much as how much you take. The answer depends on how the practice is set up for tax purposes.
Salary Through Payroll
If your practice is taxed as an S corporation and you work in it, the IRS expects you to pay yourself a salary through payroll. That salary covers the work you do: chairside dentistry, supervising associates, managing staff and running operations. Like any paycheck, it is subject to Social Security and Medicare taxes.
Shareholder Distributions
Once a reasonable salary is paid, the remaining S corporation profit can generally be taken as distributions. Distributions are still taxable income, but they are generally not subject to Social Security and Medicare payroll taxes.
For example, say a practice earns $400,000 of profit and the owner takes a $200,000 salary. The other $200,000 could be distributed. Income tax applies to all of it. Payroll taxes apply only to the salary.
Owner Draws
Practices set up as sole proprietorships or partnerships pay owners through draws, which is simply a transfer from the business account to a personal account. In these structures, all of the profit is subject to self-employment tax. That is one reason many owners look at an S corporation election as the practice becomes more profitable.
What The IRS Means By Reasonable Compensation
The IRS does not publish a formula or a percentage. It looks at factors such as your training, the duties you perform, the hours you work, the profitability of the practice and what similar roles pay in the market.
You may hear a 60% salary and 40% distribution split mentioned. That is a rough rule of thumb, not an IRS rule. Benchmark against associate pay or industry data, and write down how you arrived at the number.
How Your Salary Affects Retirement And QBI
Many retirement plans, including solo 401(k)s, profit sharing plans and cash balance plans, base contributions on W-2 wages. Set your salary too low and you may limit what you can put away.
Salary also reduces qualified business income, while distributions do not. So the split can change how much of the QBI deduction for dentists you can use. Review your pay during the year, not only at year end, so there is still time to adjust.
Need More Help Determining Your Salary as a Practice Owner?
Hopefully, this article will provide a good starting point for determining your dental practice owner salary.
But the truth is, the “right” salary is going to vary based on several factors and your unique financial situation.
We strongly recommend working with an experienced dental accountant to help work out a number that’s in your best interest: tax-wise, personally, and professionally.
If you’re in the market for a new dental accountant, we’re always here to help. Here at Virjee Consulting, we’ve helped hundreds of dentists get their taxes, their books, and their growth plans pulling in the same direction. You handle the teeth. We handle the paperwork nobody went to dental school for.
Just check out our 150+ 5-star reviews on Google!
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Until next time!
If you want help benchmarking your own owner salary against your collections and EBITDA, our CPA for dentists team does this every day with practice owners across the country.
Picking your own number is the hard part, and running it correctly through payroll afterwards is what our dental payroll services take off your plate.
