One Big Beautiful Bill Explained: What Restaurant Operators Need to Know (2025 Update)

What Is the One Big Beautiful Bill?

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.

Key Tax Breaks and Provisions for Restaurants

The OBBB includes a host of restaurant-relevant provisions. Here’s a quick breakdown:

100% Bonus Depreciation (Section 168)

Restaurants can now immediately deduct 100% of the cost of qualified property placed in service after January 19, 2025. This applies to:

• Leasehold improvements
• Kitchen and bar equipment
• Furniture and fixtures
• Technology and POS systems

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.

Section 179 Expensing

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.

Pass-Through Entity Tax (PTET)

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.

• New cap on SALT deductions increases from $10,000 to $40,000
• Can be a powerful tax planning strategy in high-tax states like CA, NY, IL, etc.
• Work with your advisor to assess whether making the PTET election makes sense for your entity structure

Staffing Credits: Work Opportunity Tax Credit (WOTC)

Although not new to OBBB, the WOTC program remains a huge opportunity for restaurants that:

• Hire veterans
• Employ long-term unemployed individuals
• Bring on SNAP or TANF recipients

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.

R&D Tax Credits (R&E Credits)

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:

• Ghost kitchen or commissary development
• Recipe testing for new menu rollouts
• Packaging shelf-life improvements
• Gluten-free or allergen-free product development

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.

Energy Efficiency Incentives

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.

Additional Tax Provisions Worth Noting

• SALT Cap Increased: Deductible limit on state/local taxes is now $40,000 (up from $10K).
• 1099 Threshold Changes: Beginning in 2026, the 1099-NEC threshold increases from $600 to $2,000, reducing paperwork.
• 1099-K Reporting: Returns to the original threshold of 200 transactions and $20,000.
• Business Interest Deduction Expansion: More interest can now be deducted by excluding depreciation in calculations.
• Qualified Small Business Stock (QSBS): C-corp restaurant businesses may be eligible for up to $15M in tax-free gains if they meet QSBS rules.

What Restaurant Operators Should Do Now

Operators should begin planning immediately to take advantage of OBBB provisions that affect the 2025 tax year.

A few steps to take:

• Reevaluate your 2025 CapEx plans—accelerate purchases where deductions apply
• Consult your CPA about PTET elections and SALT deduction strategy
• Identify hiring plans and WOTC-eligible candidates
• Review your operations for R&D credit potential (especially if you run a commissary or centralized kitchen)
• Keep updated documentation—asset costs, dates placed in service, and proof of eligibility

How Fourth Can Help

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.

FAQs

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 process

Be 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.