The Tax Cuts and Jobs Act of 2017 brought about many tax changes, including a reduced deduction amount for meals and entertainment. In general, most meals were 50% deductible.
In the most recent coronavirus relief package, the Consolidated Appropriations Act of 2021, there is legislation that will be a welcome tax benefit for businesses. Business meals from a restaurant will be 100% tax deductible in 2021 and 2022, rather than 50%. As it currently stands, on January 1st, 2023, this will revert back to a 50% deduction.
The following checklist provides clarification on the new rules.
| Category | Deduction for 2018-2020 | Deduction for 2021 and 2022 | Current Legislation 2023- beyond |
| Entertainment: tickets for sporting events, theater, etc.; club expenses; golf course fees; hunting or fishing trips; etc. | 0% | 0% | 0% |
| Meals with clients where business is discussed | 50% | 100% | 50% |
| Meals with clients where business is not discussed (this is classified as entertainment) | 0% | 0% | 0% |
| Meals with employees where business is discussed | 50% | 100% | 50% |
| Meals with employees where business is not discussed (this is classified as entertainment) | 0% | 0% | 0% |
| Food and snacks provided for employees (not considered part of compensation) | 50% | 50% | 50% |
| Company picnics and parties | 100% | 100% | 100% |
| Meals for employees while they are on business travel | 50% | 100% | 50% |
| Meals and entertainment included in an employee's compensation package | 100% | 100% | 100% |
Do you have questions on how to classify your meals and entertainment expenses? Contact Sweeney Conrad’s Senior Tax Associate Connor Tidd at ctiddd@sweeneyconrad.com.