Writing off meals and entertainment for your small business can be pretty confusing. Some things are 100
percent deductible, some are 50 percent, and a few are nondeductible. It all depends on the purpose of the
meal or event, and who benefits from it.
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.
2019 Meals and Entertainment
Deduction
Here are the highlights:
| 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 |
Common 100% deductible expenses
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
Common 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
2019 vs Older Meals and
Entertainment Deductions
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: entertaining clients is now 0% deductible. 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 (old rules) | 2018 (new rules) |
|---|
| Entertaining clients (concert tickets, golf games, etc.) | 50% deductible | 0% deductible |
| Business meals with clients | 50% deductible | 50% deductible |
| Office snacks and meals | 100% deductible | 50% deductible |
| Company-wide party | 100% deductible | 100% deductible |
| Meals & entertainment (included in compensation) | 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.
