Can I Claim Business Meals (50% Deduction) as a Business Expense in United States?
Partially, US business meals are 50% deductible under IRC Section 274(n). The temporary 100% deduction for restaurant meals (2021–2022 only) has expired. Entertainment is NOT deductible at all under TCJA.
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What Internal Revenue Service (IRS) says
IRC Section 274(n) limits business meal deductions to 50% of cost when ordinary, necessary, not lavish, and either with a business associate or while traveling for business. Entertainment expenses (sports tickets, concerts, golf) are entirely non-deductible since 2018 (TCJA). On business travel, meals are deductible only if the trip requires stopping for substantial sleep or rest. A taxpayer can use actual cost or the standard meal allowance (M&IE) set by the federal per diem rates, and in both cases only 50 percent is deductible. A meal is not lavish just because it is expensive or at a high-end restaurant. On the days of departure and return the allowance is prorated, and three quarters of the daily amount is allowed under the simple method.
When you can claim
- 50%: meals with clients, vendors, prospects (ordinary and necessary)
- 50%: meals while traveling away from tax home for business
- 50%: meals during business meetings
- 100%: de minimis food and drink at the office (snacks, coffee)
- 100%: meals provided to employees as part of compensation reported on W-2
- Standard meal allowance for travel days, with 50 percent deductible, in place of keeping every meal receipt
- Incidental expenses only method of $5 a day on days with no meal expense, which is not subject to the 50 percent limit
When you cannot claim
- Entertainment (sports tickets, concerts, theater): entirely disallowed since TCJA
- Lavish or extravagant meals (judgment call)
- Meals where no business is conducted
- Spouse/family meals (unless they are bona fide employees attending for business reason)
- Lavish or extravagant meals, or any meal where no business is discussed or no business contact is present
Good to know
Pro tip: Write the business purpose and the names of the people on the back of the receipt or in the accounting app on the same day. IRS records rules require the amount, date, place, business purpose and business relationship of the people present.
Important: The 100% restaurant meal deduction (Consolidated Appropriations Act 2021) was a temporary COVID measure and ended 31 December 2022. We are back to the standard 50% limit.
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