Know What Your Restaurant Can Actually Write Off
A category-by-category reference for what’s deductible in a restaurant — kitchen supplies, equipment, labor, occupancy, and the records to back it all up.
Restaurants move fast, and margins are thin — your records shouldn’t lag behind either one. Every category here is something a working kitchen generates through normal operations, sorted so you can check it against what you’re actually tracking. Ten categories, plus the one distinction that trips people up most: repairs aren’t capital improvements, and mixing them changes your depreciation.
1 Food, Beverage & Kitchen Supplies
2 Kitchen Equipment & Maintenance
3 Labor & Payroll
4 Utilities & Occupancy
5 Marketing, Service & Operations
6 Dining Room & Décor
7 Alcohol-Specific Expenses
8 Capital Improvements
9 Loans & Interest
10 Miscellaneous & Compliance
Personal vs. business reminder: Restaurants often run multiple cards during busy days — make sure personal charges never hit the business account. If they do, label them quickly so they don’t muddy your books.
Questions we get a lot
Often yes. Bonus depreciation was permanently restored to 100% under the One Big Beautiful Bill Act for qualified property — ovens, refrigerators, POS systems, espresso machines — acquired and placed in service after January 19, 2025, with no dollar cap. Section 179 offers an alternative up to $2,560,000 for 2026.
A repair keeps equipment or the space working as it already did — fixing a walk-in cooler, patching flooring — and is deductible immediately. A capital improvement adds value or extends useful life — a major renovation, a buildout, a permanent bar installation — and gets depreciated over time instead. Mixing the two is one of the most common restaurant tax errors.
Tips passed through to employees are part of payroll, not a separate deduction, and need to be tracked and reported correctly alongside wages and payroll taxes. Mishandling tip reporting is a common source of payroll tax problems for restaurants specifically.
$2,560,000 for 2026, phasing out dollar-for-dollar once total qualifying purchases exceed $4,090,000, and reaching zero at $6,650,000. Bonus depreciation, by contrast, has no dollar limit at all, which usually makes it the better choice for a single large equipment purchase.
Clean categories protect thin margins further.
If you want a second set of eyes on how your restaurant’s expenses are categorized, we can go through your books with you.
Disclaimer: This checklist is for informational purposes only and does not constitute legal, tax, or financial advice. While we make every effort to keep the content accurate and up to date, federal and state laws and regulations can change without notice. Decisions based on this information should be made in consultation with a licensed CPA or attorney familiar with your specific situation. Leichter Accounting Services is not liable for any errors or omissions, or for any actions taken based on the contents of this checklist.