We don’t expect you to read the full 900-page tax bill. You’ve got a restaurant to run.
But inside that massive legislation are a few key changes that could save you real money, if you know where to look.
Here’s what the Tax Relief Act for restaurant owners means, what you need to know about it, and how to use it to your advantage.
Bonus Depreciation Is Back
This is a big win if you’ve spent money upgrading your kitchen, dining area, or even opening a second location.
You can now write off the full cost of qualifying improvements and purchases in the year you make them.
That means things like:
- Kitchen equipment
- Booths, chairs, bar furniture
- New floors or lighting
- Leasehold improvements
Let’s say you spent $120,000 on a remodel. You don’t have to wait 15 years to depreciate it. You can deduct it all upfront and potentially cut your tax bill by $30,000 or more.
This applies to items placed in service after January 19, 2025.
Section 179 Is Better Too
Section 179 has been around for a while, but now the limits are even higher. You can write off up to $2.5 million of qualifying equipment, and the phaseout doesn’t start until $4 million.
This is great if you’re buying used equipment or doing multiple upgrades across locations.
Bonus depreciation and Section 179 can work together, and we can help you figure out which one makes more sense depending on your income and spending.
Don’t Overlook the R&D Tax Credit
This one surprises a lot of restaurant owners, but yes, you might qualify for the federal R&D tax credit.
If you’ve been experimenting with new recipes, improving how your kitchen runs, building a unique ordering system, or streamlining processes in the back office, those efforts might count as research and development.
And here’s the big update. Under the old rules, you had to spread those expenses out over five years. That made the credit a lot less attractive.
Under the new tax law, you can now fully deduct qualifying R&D expenses in the same year you incur them. No more five-year wait.
Even better, if your average revenue is under $31 million, you might be able to go back and amend past returns from 2022 to 2024 and get a refund.
So if you’ve been innovating behind the scenes, this is worth a look. We help restaurant owners evaluate this all the time, and many are surprised to learn they qualify.
The FICA Tip Credit Is Still Around
If you’ve got tipped employees and you’re reporting their tips properly (as you should be), you can still claim the FICA tip credit.
This gives you a credit for the employer share of Social Security and Medicare taxes you paid on those tips.
It’s easy to overlook, but for full-service restaurants and bars, this can mean thousands of dollars back each year.
New Deductions for Tips and Overtime (For Employees)
There’s a new temporary deduction from 2025 to 2028 that helps tipped and hourly workers. Employees can deduct up to $25,000 in tip income and up to $12,500 in overtime pay.
This doesn’t change your taxes as the owner, but it might help your team keep more of what they earn. If you’ve got long-term staff working double shifts or racking up tips, it’s something worth sharing with them.
Pass-Through SALT Deduction Still Works
If you run your restaurant as an S Corp or partnership and you’re in a state with a pass-through entity tax (PTET), good news. That strategy still works.
Your business can pay state income tax at the entity level and deduct it on the federal return. This helps you avoid the $10,000 cap on personal state and local tax deductions.
For restaurant owners in high-tax states, this is a nice way to save without having to do anything drastic.
Fewer 1099s Starting in 2026
The 1099 reporting threshold is increasing from $600 to $2,000. That means fewer forms to file for the folks you pay occasionally, like photographers, DJs, musicians, or cleaning vendors.
This doesn’t take effect until 2026, but it should make things a little simpler down the road.
And What About Your Personal Taxes?
Let’s not forget, your restaurant’s income often shows up on your personal tax return. So the individual updates matter too.
Lower Tax Brackets Are Now Permanent
The current rates, like the 10, 12, 22, and 24 percent brackets, are sticking around. That’s good if your profits are flowing through to you as the owner. It means less of your income gets taxed at higher rates.
The Standard Deduction Stays High
You’ll still get a bigger automatic deduction without needing to itemize. In 2025, that’s $31,500 for married couples. It makes filing simpler and helps keep more of your income tax free.
Child Tax Credit Gets a Boost
The credit is going up to $2,200 per child, and up to $1,700 of it is refundable. That’s a helpful bump for families.
New Deduction for Seniors
If you’re 65 or older, there’s a new $6,000 deduction, as long as your income is below $150,000 (or $75,000 if filing single). Might not apply to everyone, but worth knowing.
You Can Deduct Interest on New Car Loans
From 2025 through 2028, you can deduct up to $10,000 of interest on a car loan, as long as the vehicle was assembled in the U.S. If you’re replacing a car used for deliveries, catering, or even just your daily commute, it might help take the edge off the cost.
So, What Should You Do Next?
If you made upgrades to your space, bought equipment, or are thinking about opening a new location, this new tax law gives you a chance to write off a lot more than before.
And if you’ve got tipped staff, if your income runs through an S Corp, or if you live in a high-tax state, you might be leaving money on the table without realizing it.
At Vast CFO, we work with restaurant owners to turn tax law into practical decisions.
We won’t just tell you what changed, we’ll help you apply it in a way that saves you money and moves your business forward.
If you want help with planning or just want to understand what this means for your specific setup, reach out.
Just use our quick form to book an introductory call with our team, and we’ll talk through what applies to your restaurant and what to do next.
Let’s make sure this tax bill actually works in your favor.
Until next time!
