Tax season is here and the April 15 filing deadline is quickly approaching. This year, for the first time, many provisions of the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, are directly impacting the returns now being prepared.
While some elements of the legislation don’t take effect until future years, several high-impact provisions apply to 2025 tax filings. For full-service restaurant owners and leadership teams, this filing season is about ensuring deductions are captured, documentation is clean, and no opportunities are left on the table.
Here are the key OBBBA provisions that matter right now.
Tip Deductions and Compliance
One of the most talked-about elements of OBBBA is the temporary deduction for tip income. For tax years 2025 through 2028, employees in occupations where tipping is customary may deduct up to $25,000 in qualified tips (voluntary cash or charged tips received from customers or through tip sharing) from their 2025 taxable income. Importantly, the deduction applies even to tips earned prior to the law being enacted on July 4, 2025. Eligibility for the tip deduction begins to phase out at a modified adjusted gross income (MAGI) of $150,000 for single filers and $300,000 for joint filers. Tip income remains subject to employment and state and local taxes, where applicable.
For servers, bartenders, and other tipped staff, this can significantly reduce federal income tax liability on their 2025 returns. For restaurant owners, however, this provision brings additional responsibility. Withholding rules are unchanged, but accurate reporting, tracking, and monitoring are essential to ensure ongoing compliance. As a result, restaurants should consider educating their staff on the importance of accurately reporting all tips. It may be helpful to explain how accurate reporting now directly benefits them through potential tax savings.
Payroll Accuracy in a High-Overtime Industry
Similar to the tip provision, OBBBA allows a temporary deduction for the premium portion of qualified overtime pay for tax years 2025 through 2028. The deductible portion is capped at $12,500 per year ($25,000 for joint filers), with the same income phaseouts that apply to the tip deduction. Like the tip income, the overtime premium pay is still subject to employment taxes like Social Security, Medicare, and state and local taxes where applicable.
For restaurants that rely on overtime during peak seasons, staffing shortages, or special events, this may benefit employees filing 2025 returns. Again, though, the burden of accuracy rests largely on the employer. The deductible portion applies only to the premium (the amount paid above the regular rate) not total overtime wages. If payroll systems are not clearly isolating premium pay, it could create confusion for employees and advisors preparing returns.
Capital Investments, Accelerated
Perhaps the most significant operator-facing provision affecting 2025 returns is the restoration of 100 percent bonus depreciation for qualifying assets acquired and placed in service after January 19, 2025.
For full-service restaurants that invested in kitchen equipment, dining room renovations, furniture or fixtures, and POS systems or back-of-house technology, this change will accelerate tax savings and improve cash flow by reducing 2025 income rather than spreading the deduction across future years.
Higher Expensing Limits for Growing Operators
In addition to bonus depreciation, OBBBA increased the Section 179 expensing limit to $2.5 million, with phaseout beginning at $4 million in qualifying purchases for property placed in service in tax years beginning after December 31, 2024.
For growing restaurant groups, multi-unit operators, and franchisees completing major buildouts in 2025, this expanded ceiling provides flexibility. While bonus depreciation often receives more attention, Section 179 can offer strategic advantages depending on income levels and state conformity rules.
Improved Interest Deductibility
Section 163(j), which took effect in 2018 as part of the Tax Cuts and Jobs Act (TCJA), limits the amount of business interest that a business can deduct. “Small business taxpayers” are exempt from Section 163(j), but larger restaurants and franchise groups have been subject to this limitation.
Now, for tax years beginning after January 1, 2025, the OBBBA allows for depreciation, amortization, and depletion to be added back into the calculation. This may benefit large restaurants and franchise groups by allowing them to deduct a larger amount of business interest.
Turning Compliance Into Strategy
Unlike some tax law changes that unfold gradually, several OBBBA provisions are already embedded in 2025 returns. That makes this filing season uniquely important.
For full-service operators, the priorities are clear:
- Confirm payroll systems properly tracked tips and overtime premium pay.
- Review asset additions for bonus depreciation and Section 179 eligibility.
- Recalculate interest limitations if applicable.
Tax season is rarely anyone’s favorite time of year. But for full-service restaurant owners and employees, it is an opportunity to capture accelerated deductions and strengthen financial reporting discipline heading into the next cycle.
Jason Acker is a Partner in The Bonadio Group‘s Small Business Advisory Group. He serves as the Tax Technical Director of the firm’s SBA Service Line and is the leader of the Restaurant and Retail segment of the firm’s Service Providers Industry Team.
Krystal Zawodzinski is a Principal in The Bonadio Group’s Small Business Advisory Group. Her focus is on providing small business clients with a full range of accounting, tax and consulting services.
Jess LeDonne is The Bonadio Group’s Director of Tax Technical. She serves as a key resource on tax legislation, technical guidance and policy developments that impact the firm’s clients.
