Small Business Taxes

Restaurant and Food Business Tax Deductions

Updated 2025-10-28

Key deductions for restaurants: COGS, tips reporting, smallwares, credits, and inventory methods for food operations.

  1. COGS & inventory
  2. Labor & tips
  3. Equipment & smallwares
  4. Potential credits
  5. Controls & records

COGS & inventory

Choose a consistent inventory method; track waste and comps to protect margins.

Labor & tips

Maintain tip reporting systems; review service‑charge treatment and payroll tax handling.

Equipment & smallwares

Capitalize significant equipment; expense smallwares when policy allows.

Potential credits

Explore hiring credits and energy‑efficiency incentives for equipment upgrades.

Controls & records

Daily sales summaries, void/comp logs, and POS reports support tax filings.