What Meals Can I Deduct?

Wallace "Wally" F. Suttle II By Wallace “Wally” F. Suttle II

The One Big Beautiful Bill Act (OBBBA) contained many changes to the tax code, today we will discuss one of those areas, business meals.This article will summarize the main rules that are in effect beginning on January 1, 2026

Meals with Customers

To qualify for any deduction, meal expenses must:

Be ordinary and necessary expenses paid or incurred in carrying on a trade or business.
Not be lavish or extravagant under the circumstances.
Involve the taxpayer or an employee being present when the food or beverages are provided.
Be properly substantiated (amount, date, place, business purpose, and business relationship of attendees.

Meals that meet the parameters listed above fall into the 50% deduction limitation under the tax code.That means, if you take a customer out to dinner for legitimate business reasons, 50% of the cost of the meal would qualify as a tax deduction.Thus, if you spent $100 on the meal, then you would receive a $50 tax deduction.

What if there is entertainment involved with the meal (sporting event ticket)?Under the tax code, entertainment remains non-deductible, regardless of business purpose. This includes:

Sporting events
Concert tickets
Golf, hunting, theater, and similar outings
Membership dues for clubs organized for business, pleasure, recreation, or other social purposes (country clubs, hunting clubs, etc)

Meals provided in conjunction with entertainment may still be deductible (50%) if the food and beverage charges are separately stated from the entertainment charges and the meals otherwise meet the business requirements listed above.

Food/Drink Available to the Public

Food and beverages made available primarily to the general public, such as complimentary coffee and snacks in a showroom or customer waiting area, remain fully deductible, provided they are not primarily for employees.

Meals for Employees

Meals provided to your employees as part of a social or recreational event (company picnic, holiday party) are still 100% deductible.However, the OBBBA brought a big change to meals, snacks or drinks provided by an employer for the employer’s convenience.After January 1, 2026, these costs are now non-deductible.The following are examples of what qualifies as meals offered for the employer’s convenience:

Meals furnished to employees on or near the employer’s premises (on-site cafeteria, meals ordered so employees can be on call, meals ordered for employees working overtime, etc.)
On premises de minimis food or beverages (snacks, coffee, soft drinks) offered to your employees for free or a reduced cost

If an employer opts to include these benefits in an employee’s taxable wages, then the costs would be fully deductible to the employer.

Travel meals

Meals consumed while traveling away from home overnight for business remain 50% deductible, assuming they meet the general substantiation and business‑purpose requirements outlined earlier.This applies whether costs are tracked by actual expenses (receipts) or via per diem, subject to applicable per‑diem rules.

Accounting Tips

To ensure your compliance with the many types of potential meal expense categories, we recommend the following:

Categorize meal expenses in your chart of accounts (for example, travel meals, client meals, employee events, on‑premises food, taxable meals) to assist with correct limitation calculations.
Make sure your employees are providing contemporaneous documentation to support the attendees and business purpose for each business meal.
Request separate line‑item charges for food and beverages when hosting at venues that also provide entertainment.
Reevaluate the cost and design of employer‑provided meal programs and break‑room offerings considering the post‑2025 non-deductibility rules.

Because state income tax rules may not follow federal treatment in every respect, separate state‑tax analysis is advisable for multi‑state businesses.

Suttle & Stalnaker, PLLC is ready to help you. If you would like more information on how this applies to you, please contact Wallace “Wally” F. Suttle II, CPA at wsuttle@suttlecpas.com or contact our office at 304.343.4126.