H.R. 7620: Creating Hospitality Economic Enhancement for Restaurants and Servers Act of 2026

This bill is called the Creating Hospitality Economic Enhancement for Restaurants and Servers Act of 2026, or CHEERS Act of 2026. The main focus of the bill is to adjust how certain equipment related to the sale of alcohol in the food service industry is classified for tax depreciation purposes.

Key Provisions

The bill proposes the following changes:

• Classification of Property: The bill classifies what is termed "qualified energy-efficient draft alcohol property" as 15-year property. This means that businesses operating restaurants, bars, or entertainment venues can depreciate the cost of this property over 15 years.
• Definition of Qualified Property: Qualified energy-efficient draft alcohol property is defined as any property that:
• Is installed in a building located in the United States,
• Is predominantly used in a restaurant, bar, or entertainment venue, and
• Consists of stainless steel or aluminum containers or commercial tap equipment used for distributing and selling alcohol.
• Effective Date: These amendments would apply to property placed in service after December 31, 2025.
• Regulatory Authority: The Secretary of the Treasury is authorized to establish regulations and guidance to implement the changes related to this classification, particularly concerning renters or lessees of qualified properties.

Impact on Businesses

By allowing businesses to depreciate this type of property over a shorter timeframe (15 years), it can potentially reduce their taxable income and tax liabilities in those years. This could offer financial relief to restaurants, bars, and entertainment venues that invest in such equipment.

Summary of Benefits

The key benefits of this legislation include:

• Encouragement for restaurants and bars to invest in energy-efficient equipment, as the tax incentives may promote sustainability.
• Financial savings for businesses in the hospitality sector through reduced tax burdens during the depreciation period.

Implementation

Once enacted, the bill will require the tax code to be updated to include the new classifications and rules, which may involve guidance from the U.S. Treasury for clarity on implementation and compliance for affected businesses.

Relevant Companies

• DIS: The Walt Disney Company - As a major operator of entertainment venues, Disney may be affected by this bill since it operates bars and restaurants on its properties.
• CMG: Chipotle Mexican Grill - As a chain restaurant, Chipotle could benefit from potential tax savings related to the purchase of energy-efficient alcohol dispensing equipment.
• DRI: Darden Restaurants - As the parent company of several restaurant brands, Darden may find cost savings through depreciation of qualified alcohol equipment.