This is big for restaurants: the One Big Beautiful Bill Act (OBBBA) restored 100% bonus depreciation—and if you’re not taking advantage of it in 2025, you’re essentially writing the IRS a check for money you could be reinvesting in your operation.
We’re talking about tens of thousands of dollars in tax savings that could fund new equipment, cover payroll during a slow month, or finally upgrade that aging kitchen line.
The catch? This benefit won’t last forever, and most operators either don’t know it exists or don’t understand how to use it.
Let’s fix that.
Key Takeaways
- OBBBA restored 100% bonus depreciation for property acquired and placed in service after January 19, 2025—up from the 60% rate that would have applied under the old phase-down schedule.
- Acquisition date matters more than placement date—property must be acquired after January 19, 2025 to qualify for the full 100% deduction, even if you don’t install it until later in the year.
- Bonus depreciation and Section 179 work better together than separately—use Section 179’s $2.5 million cap strategically for specific assets, then let bonus depreciation cover the rest with no dollar limits.
- Most restaurant equipment qualifies—including kitchen equipment, furniture, fixtures, POS systems, and certain building improvements with recovery periods of 20 years or less.
- Document everything from purchase to installation—your CPA will need contracts, invoices, and placement dates to substantiate your deductions and ensure you’re claiming the correct rate.
What Is Bonus Depreciation?
In the simplest terms, bonus depreciation is a tax incentive that lets you deduct a large percentage of the cost of qualifying assets—like kitchen equipment, furniture, and certain building improvements—in the year you put them into service, rather than spreading that deduction over several years.
For restaurant operators, this is a game-changer. Instead of depreciating a $50,000 walk-in cooler over seven years, bonus depreciation lets you write off a significant chunk (or all of it) immediately. That means more cash in your pocket now, when you need it most.
How Did OBBBA Change Bonus Depreciation?
Here’s where the OBBBA bonus depreciation changes come in.
Before the OBBBA passed, bonus depreciation was on a phasedown schedule—dropping from 80% in 2023 to 60% in 2024, and continuing to decline by 20% each year until it hit zero in 2027.
But when the OBBBA became law this summer, it reset bonus depreciation back to 100% for qualifying property placed in service after December 31, 2024. That means for 2025, you can deduct the full cost of eligible assets in year one.
This restoration of 100% bonus depreciation provides immediate tax relief for businesses making capital investments—exactly what restaurants need when margins are tight and equipment costs keep climbing.
How Much Is Bonus Depreciation in 2025?
Let’s talk numbers. Under the old law, bonus depreciation would have been 60%—meaning if you bought $100,000 worth of kitchen equipment, you could deduct $60,000 in year one. Not bad, but not great when you’re trying to manage cash flow in an industry where every dollar counts.
But thanks to the OBBBA bonus depreciation changes, that rate jumped back to 100% for property placed in service in 2025. Same $100,000 equipment purchase? You can now deduct the entire amount in year one.
For a restaurant operator in the 25% tax bracket, that’s the difference between $15,000 in tax savings (at 60%) and $25,000 in tax savings (at 100%). That extra $10,000 could cover two months of utilities or fund a marketing push for your slow season.
Here’s what this looks like in practical terms.
Say you’re opening a second location and need to outfit the kitchen: commercial range ($15,000), walk-in cooler ($50,000), prep tables and shelving ($10,000), POS system ($8,000). That’s $83,000 in qualifying equipment.
Under the old 60% rate, you’d deduct $49,800 in year one. Under the new 100% rate, you deduct all $83,000 immediately. The tax impact is significant, and the timing couldn’t be better for operators planning capital investments this year.
This expansion creates substantial planning opportunities for businesses with near-term capital expenditure needs.
How Does Bonus Depreciation Work for Restaurants?
So how does bonus depreciation work in the real world of restaurant operations? Let’s break down the mechanics.
First, not everything qualifies. Bonus depreciation applies to tangible property with a recovery period of 20 years or less. For restaurants, that includes:
- Most kitchen equipment (ranges, fryers, refrigeration)
- Furniture and fixtures (tables, chairs, booths)
- Certain qualified improvement property like dining room renovations.
The key requirement: the property must be new to you—meaning either brand new or used equipment you’re purchasing, but not assets you already own.
Timing is critical. To qualify for 100% bonus depreciation under the OBBBA, property must be both acquired and placed in service after January 19, 2025.
The acquisition date is what determines your bonus depreciation rate. If you signed a purchase contract before January 20, 2025, that equipment remains subject to the old phase-down rates (40% for 2025), even if you don’t install it until later in the year.
But if you sign the contract and acquire the property after January 19, 2025, you get the full 100% deduction when you place it in service.
Here’s a practical example: You’re renovating your dining room and replacing your HVAC system in March 2025. You sign the contract on February 15, 2025 (after January 19), and the work is completed and placed in service in April 2025. The new HVAC unit costs $40,000, the dining room furniture runs $25,000, and you’re upgrading lighting for $10,000. Because everything was acquired and placed in service after January 19, 2025, all $75,000 qualifies for 100% bonus depreciation in the year you complete the renovation.
Businesses should work closely with their tax advisors to identify which assets qualify and ensure proper documentation.
How Bonus Depreciation and Section 179 Work Together
Here’s where things get interesting for restaurant operators: you don’t have to choose between bonus depreciation and Section 179. These two tax strategies actually work better together, and understanding how to use both can maximize your tax savings in 2025.
Bonus depreciation in 2025 has no dollar limits—you can claim 100% on $1 million worth of equipment or $10 million. It applies automatically to all qualifying property unless you elect out.
Section 179, on the other hand, has a cap. Thanks to the OBBBA, that cap jumped from $1 million to $2.5 million for 2025, with a phase-out threshold of $4 million in total property placed in service.
Typically, restaurant operators get the most bang for their buck when they use Section 179 first for specific assets where you want maximum flexibility, then let bonus depreciation cover everything else.
Why?
Section 179 is elected on a property-by-property basis, so you can pick and choose which assets to expense. Bonus depreciation is an all-or-nothing election by asset class. Section 179 also requires taxable income to claim the deduction—you can’t use it to create a loss. Bonus depreciation has no such limit, which means it can create or increase a net operating loss that you can carry forward.
These two strategies aren’t competitors—they’re teammates. When used strategically, they give restaurant operators maximum flexibility to manage both current-year tax liability and future tax planning.
What This Means for Your 2025 Tax Strategy
Now that you understand bonus depreciation and how it works with Section 179, let’s talk about what you should actually do with this information in 2025.
Make Strategic Capital Investments
First, timing your capital purchases matters more than ever. If you’ve been putting off equipment upgrades or a dining room refresh, 2025 is the year to pull the trigger. With 100% bonus depreciation back in play, every dollar you spend on qualifying property after January 19, 2025 translates to an immediate tax deduction. But don’t rush into purchases just for the tax break—the equipment still needs to make sense for your operation. The tax savings should be the bonus, not the reason.
Maintain Rigorous Documentation
Fun, right?
But your CPA will need proof of when you acquired the property (purchase contracts, invoices) and when you placed it in service (installation records, first use dates). The difference between a contract signed January 18 versus January 21 could mean the difference between 40% and 100% bonus depreciation. Keep your paperwork organized from day one.
Work With Your Tax Team…Like Now
Third, coordinate with your accountant before year-end. If you’re planning major capital expenditures, model out the tax impact before you commit. Should you use Section 179, bonus depreciation, or both? Will the deduction create a loss you can carry forward, or should you spread purchases across multiple years? These aren’t questions to figure out in March when you’re filing taxes—they’re strategic decisions to make now.
Finally, understand that bonus depreciation is just one piece of your restaurant tax strategy. There are dozens of other tax benefits specifically designed for restaurant operators, from the FICA tip credit to work opportunity tax credits to energy-efficient equipment deductions. Not sure what you might be missing?
Take our Restaurant Tax Assessment to identify opportunities specific to your operation. The operators who benefit most aren’t the ones who understand the tax code—they’re the ones who partner with CPAs who specialize in restaurants and can help them make these strategies work in the real world.
Partner With Restaurant Tax Experts Who Know Bonus Depreciation Inside and Out
The OBBBA’s restoration of 100% bonus depreciation represents one of the most significant tax-saving opportunities for restaurant operators in years. But knowing these benefits exist and actually capturing them are two very different things.
A generalist accountant might know the basic rules of bonus depreciation, but a restaurant-specialized CPA knows how to apply them to your walk-in cooler replacement, your dining room renovation, and your POS system upgrade.
- They know which improvements qualify as tangible property versus building improvements.
- They understand the acquisition date rules and can help you time purchases strategically.
- They know how to coordinate bonus depreciation with Section 179, work opportunity tax credits, tip credits, and the dozens of other tax strategies that can save restaurant operators serious money.
If you’re ready to stop leaving money on the table and start working with a CPA who actually understands your business, we can help. The Restaurant CPAs connects operators like you with vetted accounting firms that specialize in restaurants. Get matched with your perfect restaurant CPA today.
