Restaurant Equipment Tax Deductions: A Guide

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Restaurant equipment purchases can often be deducted in the year they are placed in service rather than depreciated over several years, which can significantly reduce a restaurant’s tax burden.

Section 179 Deduction Basics

Section 179 of the U.S. tax code allows eligible businesses to deduct the full purchase price of qualifying equipment, up to an annual limit, instead of spreading the deduction over years.

Applies to new and used equipment purchased and placed in service the same year
Has an annual dollar limit set by the IRS each year
Requires the equipment be used more than 50% for business
Can be combined with bonus depreciation in some cases

Bonus Depreciation as an Alternative

Bonus depreciation allows businesses to deduct a percentage of equipment cost immediately and can apply even when Section 179 limits have been reached.

Working With a Tax Professional

Because deduction rules and limits change from year to year, restaurant owners should confirm current-year eligibility with a qualified accountant before finalizing large equipment purchases.

Equipment Deduction Options at a Glance

Deduction Type	Timing	Key Requirement
Section 179	Full deduction in purchase year	Annual dollar cap applies
Bonus depreciation	Partial or full deduction in purchase year	Percentage varies by tax year
Standard depreciation	Spread over multiple years	Used when other options are unavailable

Frequently Asked Questions

Does Section 179 apply to used restaurant equipment?

Yes, Section 179 applies to both new and used equipment as long as it is new to the business and placed in service during the tax year.

Is there a limit on how much equipment I can deduct?

Yes, Section 179 has an annual total deduction limit set by the IRS that changes periodically, so current limits should always be confirmed.

Can financed equipment still qualify for a deduction?

Yes, equipment purchased with financing generally still qualifies as long as it is placed in service during the tax year.

Should I time equipment purchases around tax deadlines?

Many operators intentionally schedule major equipment purchases before year-end to capture the deduction in that tax year, but this should be planned with an accountant.