Understanding meals and entertainment expense deductions can be confusing. The Consolidated Appropriations Act, signed into law on December 27, 2020, temporarily changed the deductibility of meals to boost the restaurant industry. Qualified business meals purchased from a restaurant in 2021 and 2022 are 100% deductible. However, for purchases made in 2023 and beyond, the rules established in the Tax Cuts and Jobs Act apply, which means restaurant expenses are once again subject to the 50% limit on deductibility. See the chart below for a summary of the meals and entertainment rules for 2022 versus 2023.
| Meals and Entertainment – Comparison Chart | ||
| 2022 Treatment | 2023 Treatment | |
| Client Business Meals | 100% deductible, if provided by a restaurant, otherwise
50% deductible -Taxpayer present -Not lavish or extravagant |
50% deductible
-Taxpayer present -Not lavish or extravagant |
| Office Holiday Party or Picnic | 100% deductible | 100% deductible |
| Sporting Event tickets | No deduction | No deduction |
| Meals during entertainment events | 50% deductible
-If purchased separately or stated separately |
50% deductible
-If purchased separately or stated separately |
| Transportation to/from Restaurant for business meals | 100% deductible | 100% deductible |
| Club dues | No deduction | No deduction |
| Water, coffee, and snacks at the office | 50% deductible, non-deductible after 2025 | 50% deductible, non-deductible after 2025 |
| Meals in Office during meetings of employees, stockholders, agents or directors | 50% deductible | 50% deductible |
| Meals during business travel | 50% deductible | 50% deductible |
| Meals at a seminar, conference or business league event | 50% deductible | 50% deductible |
| Meals included in charitable sports package | 100% deductible | 50% deductible |
| Meals provided for the convenience of employer; provided occasionally to employees; or overtime meals | 50% deductible, non-deductible after 2025 | 50% deductible, non-deductible after 2025 |
| Meals included as taxable compensation | 100% deductible | 100% deductible |
| Meals expenses sold to a client or customer (i.e., reimbursed) | 100% deductible | 100% deductible |
| Food offered to the public for free (e.g., at a conference or seminar) | 100% deductible | 100% deductible |
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