Breaking Down the One Big Beautiful Bill
By: John McNamara, MRLA VP of Government Affairs
For months, Americans have been hearing about the benefits and potential pitfalls of House Resolution 1 (H.R. 1) better known as The One Big Beautiful Bill (OBBB.) Are these 331 pages of legislative text truly beautiful or is it a nightmare filled loopholes and unintended consequences? Will this help you expand your business, your team and in turn grow your bottom line or are you going to long for the days prior to the enactment of The OBBB?
Full Expensing of Capital Equipment Purchases
Unfortunately, critical items like deep fryers, refrigerators and ovens break and usually when its most inconvenient. Fortunately, under H.R. 1 the expense to replace these items, which can be close to 20% of your income, can deduct the full cost of the replacement from their taxes in that fiscal year instead of only a portion over several years.
Qualified Business Income Deduction
Running any business isn’t easy. Running a business in the hospitality industry at times can feel impossible You don’t live a traditional lifestyle, and don’t take a traditional salary. Luckily, up to 20% of your “pass through income” can be deducted and used to help keep the lights on.
Business Interest Expense Deduction
Restaurants and hotels are capital intensive businesses that rely on debt financing in order to grow. By being allowed to include depreciation and amortization in your calculations for the maximum interest deductions on your business debt. This allows you to more effectively manage debt costs for business growth.
Family and Medical Leave Tax Credits
A benefit for employers and employees. By bringing down the cost of offering leave beyond mandatory requirements you can retain and attract top-tier staff in an industry with high turnover.
Estate Tax Relief
The hospitality industry has provided a pathway for countless people to achieve the American dream. From the family-owned restaurant to the multi-generational hotel, some are born into, grow up in and want to continue the family legacy. The intention of this legislation was to make it easier for businesses to operate. When it comes time to transfer your business to the next generation the burdens have been lessened.
Each of these deductions was slated to expire and it was a pleasure to collaborate with our partners at the National Restaurant Association in order to make these permanent. These permanent provisions will allow you to make long-term plans for investment and growth. From hiring more employees to expanding to new locations the tax provisions in the OBBB are to going to support growth and won’t expire or change.
Unfortunately, critical items like deep fryers, refrigerators and ovens break and usually when its most inconvenient. Fortunately, under H.R. 1 the expense to replace these items, which can be close to 20% of your income, can deduct the full cost of the replacement from their taxes in that fiscal year instead of only a portion over several years.
Qualified Business Income Deduction
Running any business isn’t easy. Running a business in the hospitality industry at times can feel impossible You don’t live a traditional lifestyle, and don’t take a traditional salary. Luckily, up to 20% of your “pass through income” can be deducted and used to help keep the lights on.
Business Interest Expense Deduction
Restaurants and hotels are capital intensive businesses that rely on debt financing in order to grow. By being allowed to include depreciation and amortization in your calculations for the maximum interest deductions on your business debt. This allows you to more effectively manage debt costs for business growth.
Family and Medical Leave Tax Credits
A benefit for employers and employees. By bringing down the cost of offering leave beyond mandatory requirements you can retain and attract top-tier staff in an industry with high turnover.
Estate Tax Relief
The hospitality industry has provided a pathway for countless people to achieve the American dream. From the family-owned restaurant to the multi-generational hotel, some are born into, grow up in and want to continue the family legacy. The intention of this legislation was to make it easier for businesses to operate. When it comes time to transfer your business to the next generation the burdens have been lessened.
Each of these deductions was slated to expire and it was a pleasure to collaborate with our partners at the National Restaurant Association in order to make these permanent. These permanent provisions will allow you to make long-term plans for investment and growth. From hiring more employees to expanding to new locations the tax provisions in the OBBB are to going to support growth and won’t expire or change.
These tax deductions recognize that no business can thrive without employees. From staying late, working weekends or going the extra mile for customers your employees deserve and have earned these deductions.
No Tax on Tips
This issue became a campaign promise for both candidates in 2024 election. Under H.R. 1, tipped employees will be allowed to deduct $25,000 for their federal income taxes. Obviously, this will lower the amount they owe and increase how much they take home. Both the employee and employer will still be required to FICA. This deduction expires at the end of 2028.
No Tax on Overtime
Most people choose the hospitality industry for the flexible schedule. However, at times, its all hands on deck and employees work overtime. In those cases, most employees who earn 1.5x overtime pay will be able to deduct up to $12,500 from their federal taxes. Both the worker and employer will still contribute to FICA. This deduction expires at the end of 2028.
These tax deductions recognize that no business can thrive without employees. From staying late, working weekends or going the extra mile for customers your employees deserve and have earned these deductions.
This issue became a campaign promise for both candidates in 2024 election. Under H.R. 1, tipped employees will be allowed to deduct $25,000 for their federal income taxes. Obviously, this will lower the amount they owe and increase how much they take home. Both the employee and employer will still be required to FICA. This deduction expires at the end of 2028.
No Tax on Overtime
Most people choose the hospitality industry for the flexible schedule. However, at times, its all hands on deck and employees work overtime. In those cases, most employees who earn 1.5x overtime pay will be able to deduct up to $12,500 from their federal taxes. Both the worker and employer will still contribute to FICA. This deduction expires at the end of 2028.
These tax deductions recognize that no business can thrive without employees. From staying late, working weekends or going the extra mile for customers your employees deserve and have earned these deductions.
After relentless advocacy for our industry, the MRLA has successfully and proudly secured a legislative solution that preserves Michigan’s tip credit and smooths out rigid aspects of paid leave mandates. Read here for more information.
