Restaurant equipment is expensive, and the tax code gives you multiple ways to write it off — some much faster than others. The difference between using standard depreciation and using accelerated methods like Section 179 or bonus depreciation can be $20,000–$80,000 in first-year tax savings on a single equipment purchase. Yet most restaurant owners let their CPA default to standard MACRS schedules without exploring the alternatives. Here's a complete walkthrough of what you can write off and when.
How Restaurant Equipment Depreciation Works
Under standard MACRS (Modified Accelerated Cost Recovery System), restaurant equipment is classified into categories based on its useful life as defined by the IRS. You depreciate the cost over that period, taking a portion of the deduction each year.
But you don't have to use standard MACRS. Two accelerated methods — Section 179 and bonus depreciation — allow you to deduct most or all of the cost in the year you place the equipment in service. The result: instead of waiting 5–7 years to fully deduct a $50,000 oven, you deduct the entire amount in year one.
Depreciation Schedules by Equipment Type
| Equipment | MACRS Life | Section 179 Eligible | Bonus Depreciation Eligible |
|---|---|---|---|
| Commercial ovens and ranges | 7 years | Yes | Yes |
| Walk-in coolers and freezers | 7 years | Yes | Yes |
| Refrigeration units | 7 years | Yes | Yes |
| POS systems and terminals | 5 years | Yes | Yes |
| Dining furniture (tables, chairs, booths) | 7 years | Yes | Yes |
| Kitchen exhaust hoods | 7 years | Yes | Yes |
| Grease traps and plumbing fixtures | 15 years (QIP) | Yes | Yes |
| Interior signage | 7 years | Yes | Yes |
| Exterior signage | 15 years | Yes | Yes |
| HVAC systems | 15 years (QIP) or 39 years | Yes (if QIP) | Yes (if QIP) |
| Smallwares (pots, pans, utensils) | Expense immediately | N/A | N/A |
Section 179: Immediate Full Deduction
Section 179 allows you to deduct the full cost of qualifying equipment in the year you place it in service, up to $1,250,000 in 2026. For most restaurant operators, this limit is more than enough to cover all equipment purchases for the year.
Key rules for restaurant owners:
The equipment must be used more than 50% for business — not an issue for commercial kitchen equipment, but relevant if you're buying a vehicle that's used for both deliveries and personal use.
You must have enough taxable income to use the deduction. Section 179 can't create a loss — it can only reduce your income to zero. Any excess carries forward to future years.
Used equipment qualifies as long as it's new to you. Buying a used walk-in cooler from a closing restaurant? Section 179 applies.
Example: You purchase a $45,000 commercial oven, a $28,000 walk-in cooler, and a $12,000 POS system — $85,000 total. Under standard MACRS, you'd deduct roughly $12,000–$15,000 in year one. Under Section 179, you deduct the full $85,000 immediately. At a 37% tax rate, that's a $31,450 first-year tax benefit versus ~$5,000 under standard depreciation.
Bonus Depreciation: What's Changed in 2026
Bonus depreciation was 100% through 2022, meaning you could deduct the entire cost of new and used equipment in year one. Since then, it's been phasing down by 20% per year. In 2026, the rate depends on where we are in the phaseout schedule — check with your tax strategist for the current rate.
Bonus depreciation differs from Section 179 in a few important ways:
No income limitation. Unlike Section 179, bonus depreciation can create or increase a net operating loss (NOL), which can be carried forward to offset future income.
No annual cap. Section 179 has a $1,250,000 limit; bonus depreciation has no dollar ceiling.
Applies automatically unless you elect out. Your CPA needs to know whether you want to use it or not.
Leased vs. Owned Equipment
If you lease equipment (common for POS systems, ice machines, and some kitchen equipment), the tax treatment is different:
True lease (operating lease): Monthly lease payments are deductible as a business expense. You don't depreciate the equipment because you don't own it. Simple, but you don't get the large first-year deduction.
Capital lease (lease-to-own): Treated as a purchase for tax purposes. You depreciate the equipment and may be eligible for Section 179 or bonus depreciation. The "interest" portion of the payment is also deductible.
For restaurant owners with sufficient cash flow, purchasing typically provides better tax results than leasing — especially when Section 179 is available. But leasing preserves cash and may be the right choice when opening multiple locations simultaneously.
Timing Strategies for Year-End Purchases
The IRS requires that equipment be "placed in service" — meaning installed and ready for use — by December 31 to qualify for that year's deduction. This creates a powerful year-end planning opportunity:
Q4 equipment review: In October or November, evaluate what equipment you need in the next 6–12 months. If you're going to buy it anyway, purchasing and installing before December 31 accelerates the deduction by a full year.
Coordinate with your tax projections. If your taxable income is higher than expected, a strategic equipment purchase can bring your tax bill down significantly. If income is lower, you might defer the purchase to next year when you'll have more income to offset.
Planning an equipment purchase? We'll model the tax impact of Section 179, bonus depreciation, and standard MACRS for your specific situation — so you know exactly which method saves you the most.
Book a Free Equipment Review →The Bottom Line
Restaurant equipment depreciation isn't just an accounting line item — it's a strategic lever that can put tens of thousands of dollars back in your pocket in year one. The key is knowing your options (Section 179, bonus depreciation, standard MACRS), understanding which equipment qualifies for each, and timing your purchases to maximize the tax benefit. If your CPA is defaulting everything to standard 7-year MACRS without discussing alternatives, you're almost certainly overpaying.