CHEERS Act Offers Tax Breaks for Energy-Efficient Keg Systems, Starting 2025

The Creating Hospitality Economic Enhancement for Restaurants and Servers Act—the CHEERS Act—is a targeted piece of tax legislation aimed squarely at the hospitality industry. What it does is simple: it expands an existing tax deduction for energy-efficient commercial property to specifically include stainless steel or aluminum keg containers and the associated commercial tap equipment used to dispense alcohol.

The Tax Break That Pays for Your Taps

Under current tax law (Section 179D of the Internal Revenue Code), businesses can deduct the cost of installing energy-efficient systems like lighting, HVAC, and building envelopes. The CHEERS Act essentially slips energy-efficient draft equipment into this existing deduction category. Think of it as telling the IRS, “Hey, this fancy new keg system is just as important for saving energy as that new LED lighting system.” This means that if you run a restaurant, bar, or entertainment venue, you can now claim a deduction for upgrading to energy-efficient draft equipment, provided it meets the general energy efficiency standards required by the existing law.

Who Gets to Cheers?

This benefit is strictly for businesses that are primarily operating as a restaurant, bar, or entertainment venue. If you run a small office and have a single kegerator for Friday happy hours, you’re likely out of luck. The equipment must be used for dispensing and selling alcohol, and it must be put into service after December 31, 2024. For the small business owner facing rising utility bills, this is a clear win. It provides a financial incentive to swap out older, less efficient systems for modern, energy-saving equipment, which lowers their operating costs over the long term. This is a direct financial benefit to the owners, which ideally translates into better stability for their employees.

The Fine Print and the Future

It’s important to note that the equipment must still meet the general energy efficiency requirements of Section 179D, so simply buying a new keg isn't enough; it has to be demonstrably energy-saving. Furthermore, the Treasury Secretary is tasked with issuing guidance on how this will work, especially concerning situations where businesses rent or lease this qualified equipment. This is a crucial detail because many small businesses prefer leasing high-cost equipment. The fact that the law explicitly mandates guidance on leasing suggests the intent is to make this deduction accessible even to those who don't purchase the equipment outright. Since the effective date is January 1, 2025, business owners have time to plan their capital investments and ensure they are purchasing equipment that will qualify under the new rules.