U.S. Business Tax Relief 2025–26: Updates for Restaurants, Hotels, and Retailers

Running a small restaurant, a boutique hotel, or a retail store already feels like walking a tightrope. Add in tax law changes, and it can feel like doing so in a windstorm. The good news: the 2025–26 tax landscape offers several reliefs, incentives, and twists that, when leveraged smartly, can put money back into your business.

This article is your navigator’s map highlighting business tax changes 2025, commercial property tax relief, small business tax deductions 2025, energy efficiency tax credits, and updates to the Section 179 deduction limit 2025. I’ll anchor this in your world (restaurants, hotels, retail) and give you concrete next steps.

Big Picture: What Changed in 2025 (and Why It Matters)

Before diving into sector-specific effects, keep these high-level changes in mind:

• In July 2025, Congress passed the One Big Beautiful Bill (OBBB or OBBBA), which extended or permanently adopted many tax provisions from the 2017 TCJA, revived or expanded incentives, and introduced new credits and deductions.
• Among the most consequential changes: restoration of 100% bonus depreciation for qualified property placed in service after January 19, 2025 reversing its previous phase-down schedule.
• The Qualified Business Income (QBI) deduction (a pass-through deduction, sometimes called 20% deduction) was made permanent.
• More complex reporting rules (1099-K thresholds) and new deductions (e.g. for overtime pay) were also introduced.

So, your tax planning for 2025–26 needs to be more proactive than in past years. Don’t just wait for your accountant at year-end.

Commercial Property Tax Relief & Real-Estate Incentives

For many restaurants, hotels, and retailers, real estate is a major asset. Changes in tax law in 2025 open new opportunities (and pitfalls) here.

100% Bonus Depreciation Comes Back

Thanks to the OBBB, property you acquire and place in service after January 19, 2025, that qualifies is now eligible to be expensed 100% in the first year (i.e. 100% bonus depreciation).

Why it matters to you: If your hotel invests in new equipment in the kitchen, HVAC, or even new furniture. Instead of depreciating those over several years, you might be able to write them off at once. That accelerates tax benefits and improves cash flow.

A practical tip: classify your property costs carefully via a cost segregation study, to identify portions (e.g. fixtures, lighting, signage) eligible for shorter lives and bonus depreciation. That study’s cost often pays for itself.

Commercial Property Tax Relief (State & Local)

“Commercial property tax relief” is often more a state/local matter than a federal one. While the federal law doesn’t directly reduce your local property tax bill, some states and municipalities are moving to soften assessments, cap annual increases, or offer abatements especially for renovations, energy upgrades, or distressed areas.

• Monitor local government proposals in your city or county many are pushed under “property tax reform 2025.”
• If your hotel or restaurant is in a redevelopment area, historic district, or enterprise zone, check if property tax abatement or assessment freezes are available.
• Document any “before and after” improvements you make those sometimes qualify for assessment credits or are excluded in reassessment.

In short: don’t expect automatic relief from Uncle Sam, but local governments may be your ally.

Energy Efficiency Tax Credits & Section 179D

Sustainability isn’t just good PR it’s becoming tax strategy.

What Is Section 179D?

Section 179D allows a deduction for energy-efficient improvements in commercial buildings (HVAC upgrades, building envelope, lighting systems) placed in service.

Under recent expansions (via the Inflation Reduction Act), that deduction was significantly enhanced including for retrofit properties and for buildings owned by tax-exempt entities (with allocation to designers).

What Changed in 2025

For properties placed into service in 2025:

• The base deduction starts at $0.58 per square foot (for 25% energy savings) and increases by $0.02 per additional percentage point of improvement, up to $1.16/sq ft (for ~50% savings).
• If you comply with prevailing wage and apprenticeship requirements (PWA), the enhanced range is $2.90 up to $5.81 per sq ft.
• You must file Form 7205 to claim this deduction.

Example (Hypothetical)

Suppose you own a 20,000 sq ft hotel wing and upgrade lighting, HVAC, and envelope in 2025, achieving a 40% energy savings over baseline. You meet prevailing wage rules. At ~$4.5/sq ft deduction (somewhere in mid-range of $2.90–$5.81), your deduction could be:

20,000 sq ft × $4.50 = $90,000

That’s a direct reduction in taxable income an attractive return, especially in a renovation year.

Action Steps for You

1. Before initiating upgrades, engage with architects or energy consultants to model potential savings (so you know if the improvement justifies the tax investment).
2. Watch prevailing wage/apprenticeship compliance meeting them unlocks the higher tier deduction.
3. Coordinate with your tax advisor to file Form 7205 timely.
4. If your business leases space (for a retail store in a multi-tenant building), negotiate that the deduction flows back to you or ensures appropriate allocation in the lease.

Small Business Tax Deductions 2025 (What’s Still Alive, What’s New)

You know you’ve got lots of deductions already. The key is knowing which got better, which got locked in, and which are disappearing.

Section 179 Deduction Limit 2025

The. Section 179 deduction (do not confuse with 179D) allows expensing in the first year of qualifying property (equipment, machinery, furniture, etc.). For 2025, the limitation of the deduction is significant (subject to phase-out).

• According to Section179.org, for 2025 businesses can deduct up to $1,250,000 in qualifying purchases (this applies if you don’t exceed the investment phase-out threshold).
• Always ensure the asset is “placed in service” (i.e. ready and usable) in 2025.
• This pairs nicely with bonus depreciation: you might choose between electing Section 179 or using bonus depreciation (or a mix), depending on future profit expectations.

Qualified Business Income (QBI) Deduction

If your restaurant, hotel, or retail business is a pass-through entity (e.g., LLC, S-corp, partnership), the 20% QBI deduction is permanent.

That’s equal to potentially taking up to 20% of your qualified business income (after certain limits) out of taxable income. Work with your CPA to optimize this (e.g., monitoring wages, depreciable basis of property, any “specified service trade or business” limits).

Expanded Childcare & Hiring Credits

In OBBB, employer-provided childcare credits were raised: the maximum credit increased from $150,000 to $500,000 (or $600,000 for small businesses that meet certain requirements).

And the Work Opportunity Tax Credit (WOTC) for hiring certain target groups still remains available until 2025.

If your hotel has seasonal or disadvantaged workers, this would reduce payroll tax payments.

What to Watch Out For

• Some energy and renewable tax credits introduced under prior administrations may be scaled back under the new law. OBBB contains rollback provisions on certain clean energy incentives.
• Document everything meticulously. The more complex and “bonus/credit-based” deductions you take, the more audit attention they attract.

Use Cases in Your Industries

Here are scenarios to ground this in your world:

Restaurant (Texas, Medium Size)

Let’s say “Bluebonnet Bistro,” a full-service restaurant in Austin, replaces kitchen equipment, HVAC, and LED lighting in 2025, and spends $500,000 on qualifying equipment.

• Elect Section 179 for, say, $300,000 of equipment (if it qualifies).
• Use bonus depreciation for remaining amounts.
• Also retrofit for energy efficiency for lighting, envelope, and HVAC and file 179D. Suppose they achieve 35% energy savings, meeting prevailing wage: they get, say, $3.50/sq ft × 5,000 sq ft = $17,500.
• Use WOTC credit by hiring from eligible groups.

These combined moves reduce Bluebonnet’s taxable income significantly cash relief in the same year.

Boutique Hotel (Florida, 40 Rooms)

For “Sunrise Suites,” you refurbish rooms, install smart thermostats, upgrade building insulation and HVAC, and upgrade appliances.

• The large capital layout makes the 100% bonus depreciation very attractive.
• The energy efficiency work qualifies for 179D, potentially yielding tens of thousands in deductions.
• If local government offers property tax abatement for “green buildings” or ADA upgrades, use that too.
• Keep in mind that your depreciation recapture and property use changes need planning.

Retail Chain (Small, Multi-State)

Suppose “Trendy Threads” opens three new stores and updates lighting/fixtures in existing ones.

• For new stores, fully expense fixtures and furniture via bonus depreciation.
• For lighting and HVAC retrofits, push for 179D qualification.
• Because of lease arrangements, negotiate who gets the benefit of deductions in lease agreements (you or the landlord).
• Use the QBI pass-through deduction if your entity qualifies.

Timeline & Checklist: Don’t Miss the Boat

Year-end After Review audit preparation: document energy savings, wage compliance, invoices, certifications

Final Thoughts

Key takeaway: The 2025–26 tax landscape offers you more levers than usual. The interplay of business tax law updates 2025, renewed bonus depreciation, wider credits, and augmented energy deductions means that small business tax relief 2025 is real if you plan and act.