Restaurant Taxation After OBBBA: Key Provisions Impacting Hospitality Businesses

Of the modifications made by OBBBA, perhaps the most notable are the new deductions for tips and overtime pay. For the years 2025-2028, "qualifying" tips from certain occupations are deductible above the line. For the same years, "qualified" overtime pay is also deductible above the line for amounts up to $12,500 ($25,000 MFJ). Unfortunately, the IRS has said that no revisions will be made to the 2025 Form W-2. The IRS has issued a revised Form W-2 for the year 2026. 

Perhaps the most lucrative change is the restoration and permanence of 100% bonus depreciation. This, along with the addition of a new eligible category, qualified production property, could reap substantial tax savings for restaurant owners. Restaurants and hospitality businesses need to understand the requirements and opportunities afforded by OBBBA. 

Listen as our panel of federal tax experts explains how recent legislation impacts the hospitality industry and offers strategies to reduce tax liability under the new OBBBA provisions. 

I. Restaurant taxation after OBBBA: introduction

II. Restoration of 100% bonus depreciation

III. New temporary incentives

A. No tax on tips

B. No tax on overtime

IV. 20% QBI deduction

V. Business interest deduction under Section 163(j)

VI. Employee retention credit limitations

VII. Business credits

A. Work Opportunity Credit

B. Empowerment Zone Credit

VIII. Other considerations

The panel will cover these and other critical issues:

• New temporary incentives, including "no tax on tips" and "no tax on overtime"
• The permanent extension of the 20% qualified business income (QBI) deduction
• The restoration and permanence of 100% bonus depreciation
• Favorable changes to the business interest deduction calculation under Section 163(j)
• Clarifications on Employee Retention Credit claim limitations
• Work Opportunity Tax Credit (WOTC) and Empowerment Zone (EZ) Credit

Learning Objectives

After completing this course, you will be able to:

• Identify key changes under OBBBA impacting restaurants
• Determine compliance obligations for tips and overtime after OBBBA
• Decide which businesses could benefit from the Work Opportunity Credit
• Ascertain which property qualifies as qualified production property

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and their respective partners and shareholders.

  
  

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IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).