What’s in it: The bill includes provisions that will allow restaurants to build, expand, invest, improve and hire with more confidence, knowing with certainty how the federal tax code will treat those decisions.
Industry reaction: We are pleased. The NRA and its members have been working for years to secure Congress’s support for many of the provisions in this legislation. By making important tax credits and deductions permanent or by extending them for longer periods, Congress has finally ended a year-by-year "tax extenders" process. The process left restaurants in the dark about how their business decisions will be treated under the tax code. The changes provide billions of dollars in tax relief for restaurants.
What it means for your restaurants: You can make business decisions with more certainty. Among the most significant changes:
- Fifteen-year depreciation: If you build a new restaurant, improve your existing building or make improvements to a space you lease, you can deduct that spending over 15 years, not 39.5 years.
- Section 179 expensing: If you invest in tangible property for your business, such as computers or furniture, you can deduct $500,000 of the cost of financed purchases up to $2 million under the IRS's Section 179 provisions, up from $25,000 against $200,000 in purchases today.
- Bonus depreciation: If you put qualified property into place from 2015 through 2019, you'll be able to claim a significant "bonus depreciation" amount: 50 percent from 2015 through 2017, scaled down to 30 percent by 2019.
- Food donations: If you're a non-incorporated business like an S corp or an LLC and you make charitable donations of food inventory, you now get the same enhanced tax deduction corporations receive.
- WOTC: If you use the Work Opportunity Tax Credit to offset the cost of recruiting, hiring and retaining some of your employees, you now have the certainty of knowing that the WOTC program is around at least through 2019. That will provide you with a per-employee tax credit of between $1,900 and $9,600, depending on the employee hired.
Next steps: Talk to your accountant to learn more about how your restaurant company can take advantage of these changes.