The meals and entertainment deduction has gone through several revisions in recent years. Before 2018, meals and entertainment were eligible for a 50% tax deduction.  Beginning with the 2018 tax year, the Tax Cuts and Jobs Act eliminated the deduction for entertainment expenses altogether, while most meals remained 50% 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.

Beginning in 2026, there is another change. The One Big Beautiful Bill Act (formally termed “The Act”) did not extend the provision for employer-provided meals, which was scheduled to phase out after 2025.

Below is a summary of the 2025 and 2026 deductibility limits:

	2025	2026	Example
Entertainment	Not deductible	Not deductible	Take a client to a sporting event.
Business Meals	50% Deductible	50% Deductible	Restaurant meal with a client.
Employer-Provided Meals	50% Deductible	Not Deductible	Lunch brought in on the premises during a busy day.
Drinks and Snacks	50% Deductible	“De minimus” benefit 50%	Fruit and Coffee
Company-Wide Event	100%	100%	Holiday Party

 

Entertainment – Not Deductible Since January 1, 2018

• Taking a client or prospect to a sporting event or to play golf
• Attending a concert with a client and spouse
• Club memberships

However, if you take a client to play golf and then buy lunch that can deductible (50%) as long as it’s segregated and properly documented

Business Meals – 50% Deduction – Same for 2025 and 2026 

• Restaurant meal with a client, prospect, or a few employees
• Meal with prospect purchased separately after a round of golf (golf not deductible)
• Meals at a conference or while traveling for work

Meals Available to All Employees – 50% deduction in 2025.  No deduction beginning in 2026 for Meals Provided on Business Premises for Employer’s Convenience

• Meals provided to employees during training or company meetings
• Meals provided to employees while working overtime
• This includes drinks and snacks provided by employer to all employees. Currently 50% deductible as a de minimis fringe benefit.

Company-Wide Events – 100% deductible in 2025 and 2026

• Holiday parties
• Team Building Events
• Company Picnic

Confusing? Yes, but those responsible for recording expenses need to have controls and accounts set up to accurately capture the expenses that can be fully deductible, partially deductible and nondeductible.

Documentation

While there are no specific IRS requirements to document meals under $75, the best practice is to keep documentation for meals that are fully or partially deductible. That includes:

• Copy of the receipt which substantiates the date, name of restaurant and cost
• Account of who attended
• Business reason

If you have any questions, please get in touch with your Dent Moses advisor.