Buying kitchen equipment before 31 December? Section 179 and bonus depreciation for restaurants

Picture mid-December: the walk-in compressor is failing and the replacement quote is $12,000. Get the new one running by 31 December and you can usually deduct the whole cost on your 2026 return; let the install slip into January and that deduction moves to 2027.

Restaurant equipment you buy and place in service by 31 December 2026 can usually be deducted in full on your 2026 return. Two federal rules do it: 100% bonus depreciation, restored for property acquired and placed in service after 19 January 2025, and Section 179 expensing, capped at $2,560,000 for tax years beginning in 2026. "Placed in service" means installed and ready to use, not ordered. Last checked: 5 November 2026.

What counts as placed in service by 31 December?

Ready and available for its use in your business, whether or not you have used it. IRS Publication 946 gives the test and an example: a machine "delivered last year" but "not installed and operational until this year" is placed in service this year. That is the trap for kitchen equipment, which often arrives before the electrician, the plumber or the gas engineer.

Keep the installer's sign-off or a dated photo of the equipment working. If the date is ever questioned, that is your evidence.

Section 179 or bonus depreciation: what is the difference?

Both can write off the whole cost in year one. They differ in limits, in whether they can create a loss, and in what they cover. From Publication 946 (2025 edition, which sets out the 2026 limits):

Qualified improvement property is an interior improvement to a nonresidential building made after the building was first placed in service. It excludes an enlargement, elevators and escalators, and the internal structural framework. A dining room refit usually lives here; knocking through a wall may not.

You can also take a 40% bonus rate instead of 100% for the first tax year ending after 19 January 2025. That choice mostly matters for 2025 returns.

Which restaurant purchases qualify?

Most of what you buy for the kitchen, bar and dining room is tangible business property that can qualify:

• Cooking line: ranges, ovens, fryers, griddles, combi ovens, hoods (ask how yours is classed; see below)
• Refrigeration: walk-ins, reach-ins, ice machines, undercounter units
• Warewashing: dish machines, glass washers
• Bar: espresso machines, beer systems, blenders, glass chillers
• Front of house: tables, chairs, banquettes, POS hardware bought outright (if new furniture changes the room, our floor plan guide checks the spacing)
• Off-the-shelf software bought outright (Section 179)
• Interior refit work that is qualified improvement property
• A food truck's kitchen build-out (the truck itself is a vehicle, so ask your CPA which vehicle rules apply); our food truck business plan prices both

Usually not, or not this way: land, the building itself, work that enlarges the building, a subscription (an operating expense, deducted as you pay it), and equipment you rent month to month (the rent is the deduction).

The hood is the classic CPA question. A ventilation hood can be treated as equipment, or as part of the building's systems, and the answer changes which rule applies and the recovery period if you do not expense it.

Worked example: a $40,000 hood and walk-in in a good year and a bad year

This is a worked illustration, not advice. A restaurant run as a pass-through business (sole owner or S corporation) installs a $26,000 walk-in cooler and a $14,000 hood on 15 December 2026, $40,000 in all. We assume both are 5-year property, a 24% federal marginal rate, and no state tax.

Profit year: $120,000 of business income before the purchase.

The mid-quarter row is easy to miss. If more than 40% of the depreciable cost of everything you placed in service in 2026 went in during October to December, Publication 946 makes you use the mid-quarter convention, and 5-year equipment installed in the fourth quarter gets 5% of its cost in year one instead of 20%. That only matters if you do not expense the purchase, but it makes waiting for the deduction less attractive than it looks.

Expensing moves $32,000 to $38,000 of deductions from later years into 2026. It does not create extra deductions; it brings them forward.

Loss year: a $15,000 business loss before the purchase.

In a loss year the useful question is not "can I deduct it?" but "when do I want the deduction?" A deduction is worth more in a year when your income is taxed at a higher rate. Note that Publication 946 counts wages earned as an employee toward the Section 179 income limit for individuals, so an owner who also earns wages as an employee may have more room than the business result suggests. Ask your CPA how the limit applies to your business structure.

Does your state follow the federal rules?

Not always, and California is the big exception for restaurants. The California Form FTB 3885 instructions (2025) cap the state Section 179 deduction at $25,000, reduced once purchases pass $200,000, and California does not follow federal bonus depreciation. The $40,000 walk-in and hood above would be fully deducted federally but mostly depreciated over several years on the California return. Other states adjust too, so ask your CPA for the state figure, not just the federal one.

Should you buy before 31 December just for the deduction?

Usually only if you would buy the equipment within the next few months anyway. The deduction saves your marginal tax rate on the cost, not the cost itself: $40,000 of equipment at a 24% rate saves $9,600 of federal tax and still costs $30,400 in cash.

A decision rule you can use:

BUY BEFORE 31 DECEMBER IF ALL FOUR ARE TRUE

1. You need it: it replaces failing equipment or earns its cost
   back in sales, labor or energy within about two years.
2. It can be installed and working by 31 December.
3. 2026 is a profit year, or bonus depreciation fits your plan
   for a loss year.
4. The cash (or the finance payments) still works in January
   and February, the slowest months of the year.

If any one is false, wait. A deduction in 2027 is worth almost
the same as a deduction in 2026.

For the cash side of that fourth test, build a 13-week cash flow forecast with the purchase in it, and check our guide to restaurant profit margins for where a typical P&L sits after equipment and repairs. Whether to buy, rent or lease in the first place is covered in our cost to open a restaurant guide.

What to ask your CPA before you buy

Copy this into an email with the quote attached.

YEAR-END EQUIPMENT: QUESTIONS FOR [CPA NAME]

Purchase: [item], [supplier], quote [$__], install date [date]

1. Will this be placed in service in 2026 if it is installed on
   [date]? What evidence do you want me to keep?
2. Section 179, bonus depreciation, or regular depreciation for
   this item, given my 2026 income so far of about [$__]?
3. How is [the hood / the refit work] classed: equipment,
   qualified improvement property, or a building system?
4. If I finance it, can I still deduct the full cost in 2026?
5. What is the state treatment? (California caps Section 179 at
   $25,000 and does not follow federal bonus depreciation.)
6. If 2026 is a loss year, should I elect out of bonus
   depreciation for this class of property?
7. If I do not expense it, does the mid-quarter convention apply
   to my 2026 purchases?
8. If I sell or stop using it in a few years, what is recaptured?
9. Is the card reader I rent, or the software I subscribe to,
   simply an operating expense?

Your CPA's January is already full of payroll forms (see our January filing calendar), so send this in December. This guide is general information, so check with a tax adviser for your situation.

Can TablePort handle this for you?

TablePort does not give tax advice, but it can make the year-end conversation with your accountant shorter.

1. Use the accounting exports to send daily sales, tips, tax, voids and comps to your accountant, so the 2026 profit figure behind the Section 179 decision is current.
2. Sync sales to Xero or QuickBooks, so your accountant works from the same numbers as your till.
3. Check margins before you commit: the daily report shows what each day is actually bringing in, ahead of a December purchase.

One honest limit: how to treat a software subscription or a rented card reader for tax is a question for your CPA, not for us. See the POS page.