Business meals are a common expense, but what’s actually tax deductible can be a little tricky. Over the years, the rules around meals and entertainment have changed through different tax laws, so it’s always good to double-check what applies today.
Right now, most business meals are 50% deductible as long as they’re directly related to your business. To qualify, the meal should involve a client, vendor, or colleague, include some sort of business discussion, and not be considered lavish or excessive.
Entertainment costs, however, aren’t deductible. That includes things like concerts, sporting events, or shows—even if business is talked about.
While Congress has occasionally made temporary adjustments to these rules, the 50% deduction is the standard most business owners can expect going forward.
Current rules for business meals and entertainment:
| Type of expense | Deduction |
| Business Meals with Clients | 50% |
| Meals with Employees and/or Contractors *employees other than yourself & if less than 50% of staff are present | 50% |
| Meals While Traveling for Business or Conferences | 50% |
| Office Snacks *Does not apply to S Corp owner if the only employee | 50% |
| Entertainment Related Meals *Must be charged separately from other entertainment costs | 50% |
| Meals with Employees and/or Contractors *employees other than yourself & if more than 50% of staff are present | 100% |
| Food for Company Holiday Parties | 100% |
| Food & Beverages Given Free to the Public | 100% |
| Entertainment Expenses (concerts, golfing, sporting events, etc.) | 0% |
| Meals, Groceries, & Snacks for Yourself or Family | 0% |
Rules for Business Meals
There are a few rules here, so bear with us:
- The meal expense must be ordinary and necessary in carrying on your trade or business
- You, as the business owner, or your employee must be present during the business meal with at least one other party present (ex. client or colleague). This rule would not apply to meals while you or your employees are traveling for business or conferences.
- The meal expense cannot be lavish or extravagant under the circumstances
You must keep a proper record of the business meal:
- The amount of expense (delivery fees, tips, and sales tax can be included)
- The time and place of the expense,
- The business purpose of the expense, and
- The business relationship to the taxpayer of the individuals being entertained
It sounds like a lot of work, but it can be easily done. Writing the info on the receipt, taking a picture, and storing it in Google Drive, for example, is an easy way to do this (or whatever storage system you use). Gone are the days of shoe boxes full of receipts unless that's your thing.
Always Non-Deductible
- Meals, groceries, or snacks for your own consumption: As an S Corp owner, you are considered an employee of your company, BUT if you are the only employee, you cannot have a business meeting with yourself.
If you are alone, then it isn't a business meal expense. Ordering UberEats for yourself while working through lunch at home/office, going to McDonald's to grab a quick bite, or ordering a latte at a coffee shop while working on your laptop doesn't count as a business meeting and is not a deductible meal expense. These meals are considered personal and should NOT be paid through your business accounts (debit card, credit card, etc.).
- Meal expenses incurred for spouses, dependents, or other individuals accompanying the taxpayer: So if your wife tags along to a business dinner with a client, that’s cool, but her meal would not be a deductible expense. Best practice would be for you to pay for the business meals using a business account and your wife's from your personal account.
- Entertainment: Renting a suite at the Blazers game to watch Damian Lillard break a scoring record, or seeing Taylor Swift in concert to woo a client are not deductible business expenses.Meals related to entertainment, such as catering for the basketball suite, could count as a business meal but only if billed separately from the cost of the suite.
Meals on Your Profit & Loss Statement
If any meals are outside the normal 50% deductibility guidelines, like using your business card to purchase groceries for yourself (0% deductible), be sure to let us know. You can do this by responding to our monthly bookkeeping emails or message us using the message center in the Dashboard. Our general assumption is that all meal transactions in business accounts are 50% tax deductible, so if something is either 100% or 0% deductible, we will need your help to identify those transactions.
Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as legal, financial, or tax advice. It is not intended to be a substitute for obtaining legal, accounting, or other financial advice from an appropriate and/or licensed adviser, or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.