Congress Passes Tax Bill That Lays the Groundwork for Industry Growth

​Last week, the House passed tax legislation that includes policies that will strengthen the restaurant and foodservice industry, enabling restaurant owners and operators across the country to create jobs, invest in their businesses, and provide certainty for their local economies. The bill also includes President Trump’s signature No Tax on Tips and No Tax on Overtime provisions, which will provide additional tax deductions for tipped servers and bartenders, and hourly employees who earn overtime premium pay.
 
Key issues that restaurant operators, the State Restaurant Associations and the National Restaurant Association have been advocating for the past two years were all included and are permanent. The tax deductions on tips and overtime premium pay expire at the end of 2028.
 
The key provisions:

• Full expensing for capital equipment purchases: Operators will be able to meet payroll and other expenses while investing in capital equipment or refurbishing their dining rooms.
• 20% qualified business income (QBI) deduction: For the 77% of restaurants that are pass-through businesses, this will support investments in their operations and bring down their effective tax rate from 37% to 29.6%, creating parity with larger businesses.
• Business interest expense deduction: This restores depreciation and amortization to the calculation of interest payment deductibility, freeing up capital to pay off debt, expand, or make additional investments.
• Permanent family and medical leave tax credits: Supports operators who choose to offer paid family and medical leave.
• Estate tax relief: Prevents the often-overwhelming tax hurdles that force families to sell or close a restaurant rather than the next generation continuing to operate it.
• No Taxes on Tips and No Taxes on Overtime: This priority of President Trump’s includes a $25,000 tax deduction for servers and bartenders earning tips, and a $12,500 tax deduction of overtime premium pay for hourly earners. Both provisions will be available for workers from 2025 to 2028. 

​Now that the One Big, Beautiful Bill has passed, the National Restaurant Association will be working closely with the Administration as they develop guidance for putting these policies into action. At the same time, we’ll be creating clear, easy-to-use resources to help restaurants understand what these changes mean for their business and their team.

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