Tax Planning Basics for Dentists
Essential tax strategies for employed and associate dentists
Understanding Your Tax Situation
As an employed or associate dentist earning $150K-$200K, you're in Canada's highest marginal tax brackets (43-53% depending on province). Strategic tax minimization becomes essential at these income levels.
Combined federal and provincial rates mean nearly half of each additional dollar earned goes to taxes. Strategic planning including incorporation can save $10,000-$30,000 annually.
Key Tax Deductions Comparison
| Deduction/Credit | Amount | Tax Savings (45% bracket) | Eligibility |
|---|---|---|---|
| RRSP Contribution ⭐ | Up to $33,810 (2026) | ~$14,200/year | All employed dentists |
| Student Loan Interest | Actual interest paid | $1,000-$1,200 (on $4K interest) | Federal/provincial loans only |
| Professional Dues | $1,500-$3,500 | $675-$1,575 | All dentists |
| CE Courses (Required) | $2,000-$5,000 | $900-$2,250 | Mandatory CE only |
| Moving Expenses | $5,000-$15,000 | $2,250-$6,750 | 40km+ for new job |
| Child Care Expenses | $8,000/child (under 7) | $3,600/child | Lower-income spouse claims |
| Medical Expenses | Amount over 3% of income | Variable | Significant uninsured costs |
| Total Annual Savings Potential | $10K-$30K/year | ||
Student Loan Interest
Claim 15% federal + provincial tax credit on student loan interest paid. $4,000 interest paid = $1,000-$1,200 tax savings annually. Only federal/provincial student loans qualify, not bank refinancing.
Professional Dues & CE
Deduct professional association fees ($1,000-$2,000), mandatory licensing fees ($500-$1,500), and required continuing education courses. Saves $800-$2,000 annually.
RRSP Contributions
Reduce taxable income dollar-for-dollar. $20,000 RRSP contribution at 45% marginal rate = $9,000 tax refund. Use refund to accelerate debt payoff or boost TFSA savings.
Moving Expenses
If relocating 40km+ for new dental position, deduct moving costs (movers, travel, temporary accommodation). Can save $2,000-$5,000 on first-year taxes when starting post-graduation.
RRSP vs TFSA Decision
High earners (43%+ tax bracket) benefit most from RRSP contributions due to immediate tax savings. However, if student debt has 6%+ interest, pay that first before RRSPs.
TFSA better for shorter-term goals (home down payment in 3-5 years) since withdrawals are tax-free and don't affect borrowing capacity.
Ideal strategy: Maximize TFSA first ($7,500/year in 2026), then contribute to RRSP if debt is under control. RRSP room carries forward, so don't stress about maximizing immediately while carrying high-interest debt.
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Optimize Your Tax Strategy
Tax planning is one of the highest-return activities for high-income dentists. We'll analyze your specific situation and identify every available deduction and credit.
Let's build a tax-efficient plan that keeps more money in your pocket for debt repayment and wealth building.