Published August 2025
On July 4, 2025, a sweeping new federal law reshaped key tax rules for the restaurant industry. It’s called the One Big Beautiful Bill (OBBB), and while it doesn’t directly change how you run your day-to-day operations, it has major implications for how you plan, invest, and file.
Whether you operate a single location, a growing restaurant group, or a franchise system, understanding this law is critical—not just to stay compliant, but to make the most of new tax-saving opportunities before they phase out.
The One Big Beautiful Bill (OBBB) is a sweeping federal tax law signed on July 4, 2025, aimed at delivering economic relief and long-term growth incentives for U.S. businesses, including the restaurant industry.
Many of the tax breaks operators have come to rely on, like bonus depreciation, Section 179 expensing, and R&D credits, were previously set to expire or phase down. OBBB extends and enhances those incentives while introducing additional savings opportunities for restaurants investing in staffing, infrastructure, innovation, and sustainability.
At its core, OBBB gives restaurants faster access to capital, improved write-offs, and expanded deductions—crucial for an industry still recovering from pandemic-era challenges and navigating high inflation, labor pressures, and razor-thin margins.
The OBBB includes a host of restaurant-relevant provisions. Here’s a quick breakdown:
Restaurants can now immediately deduct 100% of the cost of qualified property placed in service after January 19, 2025. This applies to:
Bonus depreciation had been scheduled to drop to 40% in 2025, but OBBB makes 100% permanent for qualifying assets—restoring a major tax-saving tool for operators opening, remodeling, or expanding locations.
Limits for Section 179 deductions have been raised to $2.5M, with phaseouts beginning at $4M. This allows restaurants to expense more assets upfront—ideal for high-spend years.
For LLCs, S-Corps, and other pass-through entities, OBBB extends the ability to deduct state income taxes at the entity level, creating federal tax savings for owners.
Although not new to OBBB, the WOTC program remains a huge opportunity for restaurants that:
Credits range from $2,400 to $9,600 per eligible hire, and while WOTC is set to expire in late 2025, there’s strong industry momentum to renew it. Payroll providers can often track and file for this automatically—just ask.
Restaurants and foodservice operations that experiment with recipes, packaging, ingredients, or production processes may qualify for R&D credits, even if they don’t have a lab.
Examples include:
Starting in 2025, these costs are no longer required to be amortized—they can be fully deducted in the year incurred, boosting near-term cash flow.
The bill encourages eco-conscious investments. If you’re considering energy-efficient upgrades (HVAC, refrigeration, lighting), federal credits may be available to reduce the cost of implementation.
Operators should begin planning immediately to take advantage of OBBB provisions that affect the 2025 tax year.
A few steps to take:
New legislation and evolving reporting rules can be overwhelming. Fourth’s PEO helps restaurants stay compliant while uncovering ways to save.
A Professional Employer Organization gives you all the benefits of an HR team, without hiring one. You get experienced professionals who understand restaurant operations, HR, payroll, and compliance, ready to answer questions, resolve issues, and guide you through the impact of new rules.
Whether you need full-service support or smarter tech to manage it yourself, Fourth helps you stay ahead of regulatory change and stay focused on running your business.
If you’d like to hear an in-depth discussion of the One Big Beautiful Bill, watch our webinar.
This session features Patrick O’Reilly and Jeff Pera from CBIZ, a national leader in tax and advisory services, who share expert insights on how this law impacts restaurant owners, operators, and employees.
Q: What qualifies for bonus depreciation and Section 179 under the new law?
A: The main requirement is that the asset must have a useful life of 20 years or less. That includes many items commonly used in restaurants:– Qualified Restaurant Improvement Property (QRIP)
– Furniture, display cases, and other 7-year assets
– Most kitchen equipment, electronics, safes, and security systems (typically 5–7 year assets)If the asset is classified as Qualified Production Property, it may qualify for 100% bonus depreciation under the new rules.
Always consult your tax advisor to ensure eligibility and optimize your deductions.
Q: Can bonus depreciation be applied to purchases of used equipment?
A: Yes, in many cases. Bonus depreciation can apply to used equipment as long as it meets two key conditions: the equipment must be new to you (i.e., not previously owned by your business), and it cannot be acquired from a related party. Be sure to consult your tax advisor to confirm eligibility for your specific purchase.Q: Does putting in a new kitchen floor qualify for bonus depreciation?
A: Yes, it typically qualifies—as long as the improvement has a useful life of 20 years or less, which most flooring installations do.Q: Can I still write off improvements made earlier this year?
A: Yes. While the One Big Beautiful Bill was signed into law on July 4, many provisions were made retroactive.For bonus depreciation:
– Improvements placed in service before January 19, 2025, qualify for 40% expensing.
– Improvements placed in service on or after January 19, 2025, qualify for 100% bonus depreciation.Check with your tax advisor to ensure your specific project qualifies under the new rules.
Q: Can I still claim hiring and staffing credits if we use a payroll provider?
A: Yes. In fact, your payroll provider can often help you track and claim these credits more easily:– Many providers have built-in tools to separately track eligible wages and employees
– Some will prepare or even file the required forms for claiming credits (like the Work Opportunity Tax Credit) as part of their standard processBe sure to ask your provider what’s included and confirm they’re capturing this data correctly.
Q: If I have a plane in one LLC and move it to another LLC, do I have to pay taxes?
A: Generally, no. If the ownership remains the same, there is no taxable event. However, specific details matter, so consult with your tax advisor to ensure compliance and proper documentation.Q: What’s the likelihood that the Work Opportunity Tax Credit (WOTC) will be extended beyond 2025?
A: It’s unclear at this time. While there hasn’t been much public data on how widely the credit is being used, if your restaurant employs individuals who qualify, it’s worth reaching out to your representatives to express support for extending the program. Advocacy can help keep valuable incentives like WOTC on the table.
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