From a company-wide Beer Friday to a fancy steak dinner with your biggest client, we’ll walk you through the different meal deductions your business can take advantage of so you can save big on your tax return.
And if you need a bookkeeper (and tax expert) to guide you through some of this, check out Bench.
2023 meals and entertainment deduction
As part of the Consolidated Appropriations Act signed into law on December 27, 2020, the deductibility of meals is changing. Food and beverages were 100% deductible if purchased from a restaurant in 2021 and 2022. But for purchases made in 2023 onwards, the rules revert back to how they were defined in the Tax Cuts and Jobs Act. This means purchases at restaurants are no longer 100% deductible.
Here’s a breakdown of meal deductions using examples:
| Type of Expense | Deduction |
|---|
| Entertaining Clients (Concert tickets, golf games, etc.) | 0% deductible |
| Business meals with clients | 50% deductible |
| Office snacks and meals | 50% deductible |
| Company-wide party | 100% deductible |
| Meals & entertainment (included in compensation) | 100% deductible |
Fully deductible meals and entertainment
Here are some common examples of 100% deductible meals and entertainment expenses:
- A company-wide holiday party
- Food and drinks provided free of charge for the public
- Food included as taxable compensation to employees and included on the W-2
50% deductible expenses
Here are some of the most common 50% deductible expenses:
- A meal with a client where work is discussed (that isn’t lavish)
- Employee meals at a conference, above and beyond the ticket price
- Employee meals while traveling (here’s how the IRS defines “travel”)
- Treating a few employees to a meal (but if it’s at least half of all employees, it’s 100 percent deductible)
- Food for a board meeting
- Dinner provided for employees working late
Entertainment tax deduction
If you were deducting meals and entertainment in previous years, you might have noticed the deduction amounts have changed. The 2018 Tax Cuts and Jobs Act brought a few big changes to meals and entertainment deductions.
The biggest one: entertainment expenses are no longer deudctible. But some things haven’t changed.
Here’s a summary table of the most popular deductions, and how they’ve changed since 2017.
| Type of Expense | 2017 | 2018-2020 | 2021-2022 | 2023 onwards |
|---|
| Entertaining clients (concert tickets, golf games, etc.) | 50% deductible | 0% deductible | 0% deductible | 0% deductible |
| Business meals with clients | 50% deductible | 50% deductible | 100% deductible | 50% deductible |
| Office snacks and meals | 100% deductible | 50% deductible | 50% deductible | 50% deductible |
| Company-wide party | 100% deductible | 100% deductible | 100% deductible | 100% deductible |
| Meals & entertainment (included in compensation) | 100% deductible | 100% deductible | 100% deductible | 100% deductible |
So what’s nondeductible?
Most work-related meal purchases you can think of are either 100 or 50 percent deductible. But there are a few exceptions. For example, if you pay for your clients’ night out but you don’t actually go with them, it’s nondeductible. The same applies to a client meal at a restaurant where you invite friends or spouses—the cost of your friends is nondeductible (but you can write off half the client bill).
And of course, with the Tax Cuts and Jobs Act, client entertainment is also nondeductible—no more golf games or courtside tickets.
FAQs
This means purchases for business-related meals are back to only 50% deductible. Entertainment expenses, like sporting events or show tickets, are still non-deductible.
What are the standard deductions for 2024? ›
For 2024, the standard deduction amount has been increased for all filers, and the amounts are as follows.
- Single or Married Filing Separately—$14,600.
- Married Filing Jointly or Qualifying Surviving Spouse—$29,200.
- Head of Household—$21,900.
Meals with employees or business partners are only deductible if there is a direct or indirect business purpose. Meal expense that are 100% deductible: Recreational expenses primarily for employees who are not highly compensated, such as the business holiday party or the company picnic.
How much can I write off for meals and entertainment? ›
2023 meals and entertainment deduction
| Type of Expense | Deduction |
|---|
| Business meals with clients | 50% deductible |
| Office snacks and meals | 50% deductible |
| Company-wide party | 100% deductible |
| Meals & entertainment (included in compensation) | 100% deductible |
1 more rowJan 3, 2024
This is the amount you must pay each year for your prescriptions before your Medicare drug plan pays its share. Deductibles vary between Medicare drug plans. No Medicare drug plan may have a deductible more than $545 in 2024.
What is the IRS meal allowance for 2024? ›
The FY2024 rates
This consists of $235 for lodging and $74 for meals and incidental expenses. For all other areas within the continental United States, the per diem rate is $214 for travel after September 30, 2023 ($150 for lodging and $64 for meals and incidental expenses).
What are the new tax rules for 2024? ›
For tax year 2024, the standard deduction for married couples filing jointly rises to $29,200, an increase of $1,500 from 2023. For single taxpayers, the standard deduction rose to $14,600, a $750 increase from the previous year.
At what age is social security no longer taxed? ›
While you may have heard at some point that Social Security is no longer taxable after 70 or some other age, this isn't the case. In reality, Social Security is taxed at any age if your income exceeds a certain level.
What deduction can I claim without receipts? ›
What does the IRS allow you to deduct (or “write off”) without receipts?
- Self-employment taxes. ...
- Home office expenses. ...
- Self-employed health insurance premiums. ...
- Self-employed retirement plan contributions. ...
- Vehicle expenses. ...
- Cell phone expenses.
The deduction for unreimbursed non-entertainment-related business meals is generally subject to a 50% limitation. You generally can't deduct meal expenses unless you (or your employee) are present at the furnishing of the food or beverages and such expense is not lavish or extravagant under the circ*mstances.
The IRS requires that all meal expenditures must document the following information (regardless of cost): List of attendees (self if alone) The business purpose of the meal (topic of discussion) The cost (supported by receipt)
Are office snacks considered meals and entertainment? ›
Snacking at the Office
You are supposed to stay at that post all day, lest the security will be compromised. In that case, snacks are considered deductible expenses. However, if you can leave the office but choose not to in order to save time, then you may not claim the snacks as business meal deductions.
What meals are 100% deductible in 2024? ›
100% Deduction – Meals (and entertainment) available to all employees
- Team building social, recreational, or entertainment outings available to all company employees – for example, a company-wide golf outing, including meals.
- Company-wide holiday party or summer picnic.
Share: If you're a sole proprietor, you can deduct ordinary and necessary business meals and entertainment expenses. However, these expenses must be directly related to or associated with your business. If you're an employee, you can deduct these only to the extent your employer doesn't reimburse you.
Can I claim groceries on my taxes? ›
Grocery costs are tax-deductible once you're away from home and traveling for business. As long as you're away overnight, you can deduct 50% of your grocery costs (as long as they're not lavish or extravagant). The same is true for meals, snacks, beverages, and even coffee.
What years are meals fully deductible? ›
In 2021 and 2022, the Consolidated Appropriations Act temporarily gave taxpayers a 100% deduction for certain meals in an effort to support restaurants impacted by COVID. In 2023 and 2024, the rules reverted back to the Tax Cuts and Jobs Act, with business-related meals generally limited to a 50% deduction.
Are holiday party meals 100% deductible? ›
If an employee meets any of the above criteria, they are not a non-highly compensated employee. You can still invite them, but make sure you extend that invitation to all your staff. The following employee appreciation events are 100% tax-deductible according to the IRS: Holiday parties.
When did entertainment expenses become nondeductible? ›
The 2017 Tax Cuts and Jobs Act (TCJA) sharply limited the IRS meals and entertainment deduction – except for certain employee events, like office parties, and for recreational, social, or similar activities.
