Your restaurant can recover payroll tax paid on staff tips.
Faster write-offs on buildouts and the restaurant exception for staff meals can lower your tax bill too. Summer Associates calculates the tip credit from your payroll detail and models the federal and Connecticut result before you open or remodel.
Or call (203) 327-4311 to talk with our Stamford office.
Enrolled agents
Our practitioners are enrolled to practice before the Internal Revenue Service.
Federal and Connecticut
We model federal and Connecticut tax together, so you see the state effect of a federal move before you make it.
Local to Fairfield County
Based in Stamford and serving clients for over 35 years.
Planning, not just filing
We focus on the decisions you can still change: elections, timing, and year-end moves.
Where restaurant owners find credits and deductions
The tax code has breaks written for restaurants, and they're easy to leave partly unclaimed.
Claim the FICA tip credit every year
Get back the employer Social Security and Medicare tax paid on most employee tips.
How it works →PayrollSupport the new tip deduction for staff
Employees can deduct up to $25,000 of qualified tips, and you need to report their tips and occupations correctly.
How it works →DepreciationWrite off buildouts with QIP and cost segregation
Interior improvements you make to a building already in service are 15-year property eligible for 100% bonus depreciation.
How it works →DeductionsKeep staff meals deductible
Convenience-of-employer meals and on-site cafeteria food became nondeductible in 2026, but restaurants are carved out.
How it works →CreditKeep hiring-credit records through the WOTC lapse
WOTC lapsed for hires starting after 2025 and the IRS has retired Form 8850, but past lapses were renewed retroactively.
How it works →StructureStructure multi-unit operations
Separate LLCs per location, a management company, and a real estate entity each serve a purpose.
How it works →In-depth guides
Plain-English explainers covering the rules, the numbers, and the common mistakes.
The FICA tip credit: how restaurants recover payroll tax on tips
The §45B FICA tip credit: how it is calculated, who qualifies, the $5.15 minimum wage baseline, and claiming missed years.
Read the guide · 7 min →Connecticut restaurant taxes and payroll: meals tax, tipped wages, and paid leave
Connecticut's 7.35% meals tax, $6.38 and $8.23 tipped wages, CT Paid Leave, 2027 sick leave, and bonus add-backs, with a Stamford bistro example.
PayrollNo tax on tips: what the new deduction means for restaurant employers
How the up-to-$25,000 tip deduction works for staff, which occupations qualify, what employers must report, and why service charges don't count.
DepreciationRestaurant buildouts: QIP, cost segregation, and 100% bonus depreciation
Faster deductions for leasehold improvements, kitchen equipment, and owned buildings through qualified improvement property, cost segregation, and bonus depreciation.
How working with Summer Associates starts
The first consultation is free, with no obligation. From the first call to a plan, the process has three steps.
Start with a conversation
Call (203) 327-4311 or send us a note. Tell us what you are working on and what you want to solve.
We review the details
We look at your payroll tip reports, buildout or remodel invoices, and last return to see which strategies fit and what they could be worth.
You get a plan
We model the options on your numbers, federal and Connecticut, and set out the steps and the deadlines that apply.
Summer Associates Tax Services, 48 Union St, #1C, Stamford, CT 06906. Convenient to clients throughout Fairfield County, including Greenwich, Darien, New Canaan, Norwalk, Westport, and Fairfield.
Book a free consultationThe 2026 numbers that matter
The federal and Connecticut figures restaurant owners use for payroll, credits, and buildout planning.
| Item | 2026 figure | Notes & source |
|---|---|---|
| FICA tip credit (§45B) | 7.65% of tips above minimum wage | Measured against the 2007 federal minimum wage of $5.15 for food and beverage. Beauty services use $7.25 (IRS Form 8846) |
| Employee tip deduction (2025–2028) | Up to $25,000 | Phases out above $150,000 / $300,000 MAGI |
| Qualified improvement property | 15 years | Eligible for 100% bonus depreciation |
| Section 179 limit (2026) | $2,560,000 | Phase-out at $4,090,000 |
| WOTC | Lapsed for hires after 2025 | Not renewed as of November 2026. Form 8850 is no longer in use (IRS) |
| Social Security wage base (2026) | $184,500 | Employer FICA 7.65% |
| Connecticut meals tax | 7.35% | Statewide rate on meals and drinks. No Connecticut town adds a local meals tax (CT DRS) |
| Connecticut tipped cash wage (2026) | $6.38 servers / $8.23 bartenders | Tips must bring pay to the $16.94 minimum wage, $17.48 from Jan. 1, 2027 (CT DOL) |
Common questions
How much is the FICA tip credit worth?
It equals the employer's 7.65% Social Security and Medicare tax on tips that exceed what's needed to bring an employee's wages up to $5.15 an hour. A restaurant whose staff report $1 million of creditable tips would earn about $76,500 of credit.
Do service charges count as tips for the new deduction?
No. Mandatory service charges and automatic gratuities are wages, not tips. Only voluntary tips in occupations the IRS lists as customarily receiving tips qualify, up to $25,000 per return. Married workers must file jointly and share one $25,000 cap.
Can I still deduct meals I give my staff?
Generally yes for restaurants. Starting in 2026, §274(o) disallows the deduction for convenience-of-employer meals and on-site cafeteria food. Food sold to customers is exempt, however, and IRS regulations let a restaurant or catering business deduct 100% of that food when its own staff also eat it on shift.
Is WOTC still available?
Not for new hires. The Work Opportunity Tax Credit doesn't apply to employees who begin work after December 31, 2025, and the IRS says Form 8850 is no longer in use. Eligible hires who started by that date can still earn credit on their first-year wages paid in 2026. Congress has renewed WOTC retroactively before, so keep hiring and eligibility records for newer hires in case it happens again.
Is there a local meals tax in Stamford or elsewhere in Fairfield County?
No. Connecticut's meals tax is a single statewide rate of 7.35% on meals and drinks, made up of the 6.35% sales tax plus 1%, and no Connecticut town adds its own sales or meals tax. A mandatory service charge is part of the taxable sale unless the restaurant keeps none of it and pays all of it to the staff who served the meal.
What can I pay tipped servers and bartenders in Connecticut?
At least $6.38 an hour for servers and $8.23 for bartenders, as long as tips bring each employee to the full minimum wage: $16.94 in 2026 and $17.48 from January 1, 2027. Tip records must be backed by daily, weekly, or biweekly employee attestations. You can't take the credit for time when you're closed to patrons, and you lose it for a day when a server spends too much time on non-service work unless that time is recorded separately. Counter staff and delivery drivers generally must get the full minimum wage.
Find out which credits your restaurant could be claiming.
In a consultation, we look at your payroll tip reports, recent returns, and any buildout costs, estimate your FICA tip credit, and tell you whether earlier years may be worth amending.