New Tax Laws for Restaurants Under Trump

December 16, 2024 |Tax

With Donald Trump back in office, restaurants in the United States face significant shifts in tax policies. During his previous term, the Tax Cuts and Jobs Act (TCJA) of 2017 introduced sweeping changes that affected businesses across the board. Now, his administration is rolling out new tax reforms aimed at stimulating economic growth, which could bring both opportunities and challenges for restaurant owners.

At QMK Consulting, we’ve helped countless restaurants navigate past tax changes with precision and speed, ensuring compliance and maximizing profitability. Here's how the new tax policies under Trump’s presidency could impact your business and what steps you should take to stay ahead.

Key Tax Law Changes Affecting Restaurants

1. Lower Corporate Tax Rates

Trump has reinstated a push to lower corporate tax rates further, reducing the rate from 21% to 15%.

Impact on Restaurants:

Opportunity: Restaurants structured as C-Corporations benefit from reduced tax burdens, freeing up cash flow for reinvestment in operations, marketing, or expansion.
Challenge: Pass-through entities like S-Corps or LLCs might not see equivalent benefits unless other provisions apply.

2. 100% Bonus Depreciation Reinstated

The administration has fully reinstated 100% bonus depreciation, which allows businesses to deduct the cost of new equipment and improvements immediately.

The impact on restaurants:

Opportunity: Receive immediate tax savings on kitchen equipment, furnishings, or remodeling expenses.
Action Plan: Increase capital investments to maximize tax savings under the present policy.

3. Expanded Pass-Through Deduction

For pass-through firms, the Qualified Business Income (QBI) deduction has been raised, giving small business owners even more savings. The impact on restaurants:

Opportunity: Small restaurant owners who file as sole proprietors, limited liability companies, or S-Corps can now deduct up to 25% of eligible income, up from 20% previously.

4. Rollback of Biden-Era Tax Hikes

Trump’s policies have repealed key Biden-era tax measures that affected payroll taxes, investment income, and corporate levies.

Impact on Restaurants:

Lower Payroll Taxes: Reduced employer contributions for Social Security.
Reduced Capital Gains Taxes: Favorable rates on profits from selling business assets or property.

5. Enhanced Tax Credits for Hiring and Training

The administration is focusing on incentivizing job creation with enhanced Work Opportunity Tax Credits (WOTC) and new credits for employee training.

Impact on Restaurants:

Opportunity: Tax savings for hiring from targeted groups (e.g., veterans, long-term unemployed) and investing in staff development programs.

How These Tax Changes Could Affect Your Bottom Line

Increased Profitability: Lower tax rates and deductions free up funds for reinvestment or personal income.
Cash Flow Improvements: Accelerated depreciation lets you deduct large expenses upfront, easing financial strain.
Compliance Complexity: Rapid policy changes increase the risk of audits and penalties if you’re unprepared.

How QMK Consulting Can Help Restaurants Thrive

With Trump's tax cuts in place, restaurants need expert help to navigate the new landscape. QMK Consulting specializes in assisting restaurant owners to optimize tax strategies, increase cash flow, and minimize compliance problems.

How Can We Help?

Tax Forecasting and Planning: Make proactive adjustments to your tactics to take advantage of lower rates and new deductions.
Maximizing Tax Credits: Use hiring and training incentives to reduce payroll taxes.
Compliance Assurance: Ensure your company meets all regulatory criteria to prevent costly audits.
Resolving Tax Issues: With a proven track record, we've helped restaurants resolve tax issues promptly and accurately, even under tight timelines.

Steps Restaurant Owners Should Take Now

Review Your Entity Structure: Determine if switching to a C-Corporation would maximize savings under the new laws.
Plan for Asset Investments: Upgrade equipment or renovate to capitalize on 100% bonus depreciation.
Leverage Tax Credits: Take full advantage of hiring and training incentives.
Schedule a Consultation: Partner with QMK Consulting to ensure your restaurant is prepared for the new tax era.

Case Study: How QMK Consulting Delivered Results

A mid-sized restaurant group faced significant tax burdens under the previous administration. After partnering with QMK Consulting:

We reduced their tax liability by 30% through strategic restructuring.
We identified $50,000 in unclaimed deductions for equipment purchases.
Our team ensured compliance with all new regulations, avoiding a costly audit.

Conclusion

President Trump’s tax reforms bring unique opportunities for restaurants to lower their tax burden and reinvest in growth. However, these changes also demand careful planning and compliance. With expert advice from QMK Consulting, your restaurant can thrive in this new tax landscape.

Contact QMK Consulting today for a free consultation! Let’s ensure your restaurant stays profitable, compliant, and ahead of the curve.

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