Disclaimer: Insurance administration and dental billing recommendations, as well as interpretations of the CDT codes, represent the opinions of our experts. For the latest CDT codes and official interpretations, contact the American Dental Association or visit ADA.org. You are responsible for your own use of the CDT Codes, insurance administration, and dental billing. Laws and individual situations may vary; consult with a licensed healthcare attorney for legal counsel and advice on compliance with state and federal laws.

Sales & Use Tax: Don’t Let This Be a Pain in the Tooth

As a dental professional, your primary focus is on patient care. But in the ever-evolving landscape of practice management, the business side of dentistry — specifically Sales and Use Tax — can often feel like a molar root canal with a hidden canal and without anesthetic. 

With over 13,000 sales and use tax jurisdictions in the U.S., each with its own shifting rates and rules, staying compliant isn’t just a good idea — it’s a financial necessity. If you’re selling electric toothbrushes or whitening kits, you might be considered a retailer in the eyes of the law without even realizing it.

Here is what you need to know to protect your practice from the silent pitfalls of tax non-compliance.

Understanding the difference between sales and use tax is the first step toward a clean audit. They are mutually exclusive, meaning that either sales tax or use tax applies, but never both.

• Sales Tax: This is generally collected from the end-user. If you sell a high-end electric toothbrush to a patient, you are the middleman. You collect the tax from the patient and remit it to the state.
• Use Tax: This is the one that catches practices off guard. If you buy equipment or supplies from an out-of-state or online vendor that doesn’t charge sales tax, your practice is responsible for paying use tax to your state.

Pro Tip: In some states, if you pay sales tax on an item when you buy it and then sell it to a patient for a profit, you may only owe tax on the markup (the difference between your cost and the retail price).

What are the CDT codes you need to know?

Reporting these items correctly on the 2024 ADA Dental Claim Form is vital for accurate record-keeping and compliance. While these codes are rarely reimbursed by insurance, they are the necessary documentation and “paper trail” that can help protect you during an audit.

• D1999 Unspecified Preventive Procedure, by report: Use this for non-prescription oral hygiene care items like toothbrushes, floss, or xylitol products. It requires a narrative explanation.
• D9630 Drugs or Medicaments Dispensed in the Office for Home Use: Use this for prescription grade items dispensed for home use, such as oral antibiotics, analgesics, or topical fluoride.
• D9985 Sales Tax: This is the heavyweight code. It allows you to report the actual sales tax applied to services or products. Using this code ensures your billing and state tax reporting are in alignment.

To ensure compliance and streamline your billing process, consider the following steps when integrating D9985 into your practice:

1. Train Your Team: Stay informed by training your business and clinical teams to apply CDT codes and navigate sales tax regulations with total confidence.
2. Leverage Your Practice Management Software: Let technology do the heavy lifting by leveraging your practice management software to automatically trigger the correct CDT codes and calculate state-specific sales tax in real-time.
3. Consult a Dental CPA: Work with a CPA who can provide guidance specific to your local, state, and practice needs.
4. Know How to Submit: Stay current when submitting the 2024 ADA Dental Claim Form by reviewing the ADA’s Special Instructions for D9985.

Not all tax laws are created equal.

Tax laws vary wildly — from Oregon and New Hampshire where there is currently no sales or use tax, to states where every toothbrush sold is a taxable line item. Failing to report could lead to penalties that stretch back to the day you opened your doors. By integrating code D9985 and keeping meticulous records, you can keep your practice’s financial health as bright as your patients’ smiles.

To learn more, read our dedicated chapter on Sales and Use Tax in our 2026 Dental Administration with Confidence publication. 

Source:

Practice Booster (2026). Dental Administration with Confidence (pp. 198-200). 2025 eAssist Publishing, LLC.