With the passage of the One Big Beautiful Bill Act (OBBBA), there are several new tax provisions that food and beverage businesses and their stakeholders should understand so they can properly take action. 

For food and beverage operators and investors, OBBBA, signed into law on July 4, 2025, delivers many favorable tax changes. Much of these were first enacted under the 2017 Tax Cuts and Jobs Act (TCJA) and may seem familiar. Now that the bill has passed, business owners and financial leaders are offered clarity on business capital, R&D investments and workforce planning. Similarly, founders and family-owned business are provided tax certainty regarding business succession planning, and investors have clarity on investment planning strategies. 

 

1. EXPENSING LIMITATION

The annual expensing limit under Section 179 was increased from $1 million to $2.5 million, which is reduced by the amount that qualified property exceeds $4 million (increased from $2.5 million), for tax years beginning after Dec. 31, 2024.

 

2. BONUS DEPRECIATION

Bonus depreciation is again 100% and made permanent for qualified property placed in service after Jan. 19, 2025.

 

3. BUSINESS INTEREST EXPENSE

The business interest expense limit under Section 163(j) is once again 30% of EBITDA and permanent for tax years beginning after Dec. 31, 2024.

 

4. R&D COSTS

Research and development (R&D) costs can again be fully expensed for tax years beginning after Dec. 31, 2024. This is even retroactive for certain small business taxpayers.

 

5. QUALIFIED BUSINESS INCOME

The 20% qualified business income deduction was made permanent.

 

6. QUALIFIED SMALL BUSINESS STOCK GAIN EXCLUSION

The qualified small business stock gain exclusion under Section 1202 is enhanced for stock issued after July 4, 2025 with:

  • The gain exclusion increased from $10 million to $15 million (adjusted for inflation)
  • Shorter holding periods (albeit reduced gain exclusion — 50% if held at least three years and 75% if held at least four years)
  • The gross asset limit (in determining whether the corporation is too big to be a qualified small business) is increased from $50 million to $75 million

 

7. TAX ON GAIN OF SALE

Tax on the gain on the sale of qualified farmland to an eligible farmer in tax years beginning after July 4, 2025 can be paid in four equal installments over four years beginning with the tax year the property is sold.

 

8. ESTATE AND GIFT TAX

The estate and gift tax exemption was increased from $5 million to $15 million (adjusted for inflation) for estates created and gifts made after Dec. 31, 2025.

 

9. TAX ON TIPS

Tip compensation income for hospitality and food service employees were made temporarily tax free (for federal income taxes, payroll taxes still apply) up to $25 thousand per year (phased out for couples filing jointly with adjusted gross income over $300 thousand and over $150 thousand for others) for 2025 through 2028.

 

10. TAX ON OVERTIME 

In addition, overtime compensation income is temporarily tax free (for federal income taxes, payroll taxes still apply) up to $12.5 thousand each year per individual ($25 thousand for couples filing jointly) with the same phaseouts as the tip compensation income deduction for 2025 through 2028.

 

TAKE ACTION

With the passage of the OBBBA, food and beverage businesses have an opportunity to strengthen their financial position and plan for the future with greater clarity. These updates, from bonus depreciation and R&D expensing to new exclusions for tip and overtime income, offer tax-saving potential for operators and investors. 

Now is the time for stakeholders in this sector to assess their strategies, take advantage of available benefits and ensure they are aligned with the new tax law. Proactive planning will be key – for support, contact GHJ’s Food and Beverage Practice.