There is plenty of debate from stakeholders across finance, labor, and industry groups.
By Raj Tulshan, Founder & Managing Partner, Loan Mantra
Welcome to the bright start of a new year! 2026 brings new laws and legislation that will impact the beverage business industry. At the forefront of industry news is the One Big Beautiful Bill Act, often called the Big Beautiful Bill. So how does the Big Beautiful Bill affect beverage businesses like breweries, distilleries, bars, restaurants, distributors? Let’s take a look.
As with any major legislative proposal, there is plenty of debate from stakeholders across finance, labor, and industry groups. Now that the statute is moving from draft language to enactment, beverage businesses can start planning around what’s actually in effect.
Tax Relief Extension
The Big Beautiful Bill enables beverage business owners to better predict revenue and outcomes because it extends corporate and individual tax rates from the 2017 Tax Cuts and Jobs Act. The Act, which was scheduled to expire at the end of 2025, helps owners avoid large tax increases. For beverage business owners, especially small producers, distributors, and related service providers, it provides a level of certainty and security for strategic plans. For business owners operating as pass-through entities such as LLCs, S-corps and partnerships, the Qualified Business Income (QBI) deduction, which is usually up to 20% of profits, is extended. This should help owners of pass-through beverage businesses lower their taxable income if they qualify.
Larger, Immediate Expense Limits
The Big Beautiful Bill increases expensing limits to $2.5M for qualified property and allows for immediate expensing (100% bonus depreciation) so businesses can deduct even bigger asset purchases immediately, rather than depreciating them over many years. This can be a great incentive to invest in production equipment, brewing systems, delivery vehicles, taproom upgrades, or refrigeration and storage that is needed now and reduce taxes sooner rather than later. But some production-related tax perks (like Qualified Production Property) have specific eligibility rules. This means if your beverage business’s facility doesn’t qualify under the IRS’s definitions, you won’t receive bonus depreciation for portions of the property used for sales or tasting rooms. Check with your financial or tax advisor to confirm eligibility.
To make these deductions easier to support, keep clean documentation: a formal written statement from vendors, an itemized list of assets purchased, and invoices showing the purchase price. This will can substantiate the deduction and any later claim.
Expanded Deductions
Interest on Loans: The Big Beautiful Bill reinstates a more generous calculation to deduct business interest on commercial loans. Beverage businesses can again add back depreciation, amortization and depletion when calculating adjusted taxable income. This change allows capital-intensive businesses, which carry heavy debt loads and have high depreciation expenses (such as those operating large vehicle fleets), to potentially deduct more of their interest expenses and reduce their overall tax liability. It also allows for expanding beverage business owners to take greater deductions paid on commercial loan interest to help finance future goals like buying a new facility or refrigerated box trucks. Check with a loan advisor to ensure all qualifications are met.
From an operational standpoint, many beverage businesses will want tighter visibility into payables, receivables, and loan accounts—especially when interest expense is a key lever in financial workflows.
Research and Development: As beverage business owners push for innovation by developing new drinks and products, domestic research and development expenses can once again be fully deducted in the year they are incurred. This is significant even for small businesses that are innovating with products, processes, or software. Beverage Research & Development (R&D) is crucial for driving innovation through the creation of new beverages, enhancing existing formulas, and catering to the evolving consumer demands for health, taste, and sustainability. This has financial impacts on concept development, ingredient sourcing, prototyping, sensory testing, regulatory compliance, or even scaling up manufacturing to remain competitive. Key areas of focus include functional ingredients, plant-based options, low-sugar alternatives, and sustainable packaging, which require market research, flavor science, and process optimization.
If you’re capturing R&D time, lab supplies, or pilot-batch inputs, using financial automation software (or an expense management app tied to your accounting system) can help track costs in real time and keep supporting documentation consistent across your finance team.
No Tax on Tips
One of the biggest changes created in the Big Beautiful Bill is the new “No Tax on Tips” requirement. This temporary provision was put in place to be effective for tax years 2025 through 2028. It allows qualified tips to be income-tax-free of up to $25,000 for federal taxes only. All wages, including tips must still be reported and recorded by both employer and employee. What is important to note is that Social Security and Medicare taxes still apply on tips — the deduction affects only income tax. In addition, some states may not conform to this deduction, so tips could still be taxed at the state level. Employers must report tip income on W-2s or similar forms for employees to claim the deduction.
It’s also important to know who qualifies for this tax benefit. The rule applies to workers in occupations that “customarily and regularly receive tips”, as recognized by the Internal Revenue Service. Good examples from the beverage industry include staff such as: Bartenders, servers/waitstaff, cocktail servers, barbacks, tipped food runners, sommeliers/wine stewards, or counter service staff who receive tips. If your business handles or hold events this could also include Food/Beverage delivery drivers, catering service staff, event bartenders, valet attendants and beverage service staff. There are gray areas of this line item. If tipping is customary, regular, and documented then brewery taproom staff, tasting room hosts, coffee baristas, food truck operators (employees, not owners) and tour guides (brewery/distillery tours) may also benefit. Those who are NOT eligible are: Owners and partners, salaried managers (even if they receive tip-outs) and back-of-house staff unless tips are truly customary.
To protect the business and employees, an owner should keep records separating true tips from service charges and other charges and ensure tip reporting ties back to POS/payroll. Clear facts and documentation matter, especially if an owner or employee must ever support a claim under state law or payroll records.
The Big Beautiful Bill brings significant changes to the beverage industry, offering what is intended to be financial incentives for business owners. With extensions on tax relief, increased expensing limits, and expanded deductions, beverage businesses are better positioned to invest in growth and innovation. The act’s provision for tax-free tips provides additional support for frontline workers, offering a temporary financial boost.
As the beverage industry continues to evolve, the Big Beautiful Bill ensures that businesses have the tools and flexibility to adapt to changing market demands. Whether you’re a small brewery experimenting with new flavors or a large distributor expanding your fleet, these legislative changes offer numerous opportunities to enhance operations and drive success.
Business owners should remain informed and consult with financial advisors to fully leverage these benefits while navigating any specific eligibility requirements. The Big Beautiful Bill marks a positive step forward, reinforcing the industry’s foundation and encouraging a vibrant, innovative future.
The Tipping Point
Who qualifies for the new “no tax on tips” benefit? *
YES, RULE APPLIES:
If tips are customary, customer-provided and reported, these workers generally qualify.
• Bartenders
• Servers / waitstaff
• Cocktail servers
• Barbacks
• Tipped food runners
• Sommeliers / wine stewards
• Counter service staff who receive tips
•Food delivery drivers
• Catering service staff
• Event bartenders
• Valet attendants
MAYBE RULE APPLIES:
Certain positions may qualify if tipping is regular and documented. If customers routinely tip and tips are tracked through payroll/POS, the role likely qualifies.
• Brewery taproom staff
• Tasting room hosts
• Coffee baristas
• Food truck operators (employees, not owners)
• Tour guides (brewery/distillery tours)
NO RULE APPLIES:
• Owners and partners
• Salaried managers (even if they receive tip-outs)
• Back-of-house staff unless tips are truly customary
• Any role where “tips” are really bonuses or service charges
Important: Mandatory service charges are NOT tips under IRS rules and do not qualify.
*This is just a general guideline. Visit the irs.gov page for complete guidance and clarification on this topic.
Raj Tulshan is founder and managing partner of Loan Mantra, connect at Raj@loanmantra.com or on Linked-in at https://www.linkedin.com/in/tulshan/.
