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Updated Checklist: Meals and Entertainment Tax Deductions in 2021 and Beyond

Written by Connor Tidd | Feb 11, 2021 11:17:34 PM

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.