HR7620

The CHEERS Act of 2026 amends Section 168 of the Internal Revenue Code of 1986 to classify qualified energy-efficient draft alcohol property as 15-year property for depreciation purposes, effective for property placed in service after December 31, 2025. This change accelerates the tax write-off period for eligible equipment from the standard 39 years for commercial property to 15 years. This provides a direct financial incentive for restaurants, bars, and entertainment venues to upgrade or install new draft alcohol systems, specifically stainless steel or aluminum containers and related commercial tap equipment. The bill has four sponsors, including a senior Republican and a senior Democrat, indicating bipartisan support and a higher likelihood of progression. The money trail for this legislation flows directly through tax savings for hospitality businesses, which will then be reinvested in equipment purchases. Manufacturers of draft beer systems, kegs, and related components stand to gain from increased demand. Distributors of these products, as well as beverage companies that supply draft alcohol, will also see increased sales. The accelerated depreciation reduces the taxable income for businesses making these investments, effectively lowering their cost of capital for such upgrades. The bill also includes regulatory authority for the Secretary of the Treasury to provide guidance, including for taxpayers who rent or lease this property, which broadens the potential beneficiaries. Historically, similar tax incentives for specific equipment upgrades have led to increased capital expenditures in targeted sectors. For example, the bonus depreciation provisions in the Tax Cuts and Jobs Act of 2017, which allowed businesses to immediately expense 100% of the cost of eligible property, led to a surge in capital investment across various industries. While not directly comparable in scale, the principle of accelerated depreciation driving investment holds. When the Section 179 deduction limits were expanded in 2015, allowing businesses to deduct the full purchase price of qualifying equipment, companies like $CAT and $DE saw increased sales of their equipment. This bill, while more narrowly focused, will similarly stimulate investment in specific equipment categories within the hospitality sector. Specific winners include manufacturers of draft beer equipment and stainless steel/aluminum containers. While no publicly traded companies exclusively produce these items, large beverage companies with significant draft alcohol distribution networks will benefit from improved infrastructure at their retail partners. These include $SAM (Boston Beer Company), $TAP (Molson Coors Beverage Company), $BF-B (Brown-Forman Corporation), and $STZ (Constellation Brands). Additionally, companies that supply equipment to the hospitality industry, such as food service distributors like $SYY (Sysco Corporation) and $USFD (US Foods Holding Corp.), may see increased demand for related installation and maintenance services. Hospitality companies that operate restaurants and bars, such as $RRGB (Red Robin Gourmet Burgers), $DRI (Darden Restaurants), $TXRH (Texas Roadhouse), and (Denny's Corporation), will benefit from the tax savings and improved operational efficiency. There are no direct losers, but companies that do not offer energy-efficient draft alcohol systems may see their market share erode. The bill was introduced on February 20, 2026, and referred to the Committee on Ways and Means. The next step is committee consideration, which includes hearings and potential markups. If approved by the committee, it would then move to a vote in the House of Representatives. Given the bipartisan sponsorship, the bill has a reasonable chance of passing the House. If it passes the House, it would then proceed to the Senate for similar committee review and a floor vote. The effective date of the amendments is for property placed in service after December 31, 2025, meaning the benefits would be retroactive to the beginning of the year of introduction if passed in 2026.