The rules here changed materially under the last major round of tax reform, and a great deal of advice still in circulation predates it, which is why this area produces so many confident and wrong answers.
The current position separates entertaining from feeding people, treats several situations differently from one another, and rests almost entirely on documentation kept at the time rather than reconstructed later.
This covers what changed, how business meals are treated now, the situations that are treated more generously, what has to be recorded for a claim to stand, and how travel and staff meals differ.
The 2018 TCJA Change: Entertainment Is Gone
The Tax Cuts and Jobs Act of 2017 (effective 2018) eliminated the deduction for business entertainment expenses. This includes:
- Tickets to sporting events, concerts, theater
- Golf outings and country club dues
- Skyboxes and luxury suites
- Hunting and fishing trips with clients
- Any activity primarily for entertainment, amusement, or recreation
These are non-deductible regardless of business discussion that occurs before, during, or after the event.
A folder of receipts is weak evidence on its own. The receipt establishes the amount and nothing else. Who was there and what the business purpose was has to be noted at the time, and that one line is the difference between a claim that stands and one that does not.
Anu Gupta, CA, EA, B.Tech · LinkedInBusiness Meals: 50% Deductible
Business meals remain 50% deductible (not 100%) when all of the following apply:
- The expense is ordinary and necessary for your business
- The meal is not lavish or extravagant under the circumstances
- You or an employee is present
- The meal is with a business contact (client, prospect, employee, vendor, partner)
- There is a genuine business purpose (discussed or expected to be discussed)
100% Deductible Meals: Exceptions
| Situation | Deductibility |
|---|---|
| Meals provided at employer-operated eating facility for employee convenience | 50% (was 100% before 2018; transitioned) |
| Employer-provided meals that are de minimis fringe benefits | 50% (was 100%; TCJA reduced) |
| Company-wide parties, picnics, or holiday parties for all employees | 100% |
| Meals provided to the public for advertising or promotional purposes | 100% |
| Meals included in compensation reported on employee W-2 | 100% (employer deducts as compensation) |
| Meals provided at company-sponsored seminars or training | 50% |
De Minimis Fringe Benefits: Water, Coffee, Office Snacks
Small food and beverage items provided in the office (water, coffee, tea, snacks) may qualify as de minimis fringe benefits. These are generally 50% deductible for the employer (after TCJA changes). Fully free from income tax for employees.
Required Documentation
For every meal expense you deduct, document:
- Amount of the expense
- Date of the meal
- Location (restaurant name and address)
- Business purpose of the meal
- Business relationship of the people at the meal (name and company)
Keep the receipt. Credit card statements alone are not sufficient, they show the charge but not the required detail about business purpose and attendees.
Pro Tip: Take a photo of your receipt right after the meal and add a note with the business purpose and attendees. Apps like Expensify or Ramp make this quick and create a permanent digital record.
Meals While Traveling
When traveling overnight on business, meal expenses are 50% deductible. You do not need a specific business contact present, the requirement is that you are away from your tax home overnight for business.
Meals for Employees: What Counts as 100% Deductible
Employee appreciation events (holiday parties, summer picnics) are 100% deductible if they are made available to all employees. If it is selective (only executives, only the sales team), it falls to 50% deductible.
What About Taking a Client to a Sports Event?
The sports tickets themselves are not deductible (entertainment). However, if you buy food and beverages for the client at the venue separately (on a separate receipt), those meal costs may qualify as 50% deductible business meals.
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Frequently Asked Questions
Can I deduct client dinners?
Yes, at 50%. Document the business purpose and relationship of all attendees. Ordinary restaurant dinners with clients, prospects, or business associates qualify if the other criteria are met.
What about meals during a job interview?
Meals with prospective employees being interviewed for a position at your business are 50% deductible as a business meal.
If I take a client to a concert and also have dinner, can I deduct the dinner?
Only the dinner is potentially deductible (50%), and only if it is purchased separately (separate check, separate receipt). The concert tickets are not deductible.
Are virtual meal deliveries (sending a gift card for food during an online meeting) deductible?
What has to be recorded at the time to support a claim?
Who was present, what the business purpose was, where it took place and how much it cost. The receipt establishes the amount and nothing else, which is why a folder of receipts with no context is weak evidence. A line noted on the receipt or in an expense system at the time, naming the person and the purpose, is the difference between a claim that stands and one that does not.
Written by
Anu Gupta, CA, EA, B.Tech
Anu works with US businesses on tax and entity questions at Profitjets, from choosing a structure to the filings that follow it. She writes about the decisions owners make once and then live with for years. Connect on LinkedIn
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