A brief history

The Tax Cuts and Jobs Act of 2017 (TCJA) eliminated deductions completely for business-related entertainment and recreation. Costs of golfing with an employee or football game tickets for potential clients used to be considered ordinary and deductible business expenses. The TCJA maintained that food and beverages provided by an employer at work locations were still 100% deductible…. but only through the end of 2025.

After 2025, meals provided by employers at business premises are not deductible for tax purposes, with limited exceptions for offshore drilling rigs, and some shipping and fishing vessels. This is true for all food and beverage supplies, including coffee and other breakroom supplies. Many employers continue to incur the costs as they consider the alternative expense of employees leaving their workstations to go out for coffees and snacks, reducing productivity.

What is still deductible?

You may continue to track and deduct 100% of the costs of food and beverages at employee events like holiday parties and training sessions. You can still deduct 50% of the costs for meals during business-specific meetings with an employee or customer. Also, qualifying travel meals are still 50% deductible. Remember that “travel” means away from home for at least a full day of work plus a rest period. For more about this, check out IRS publication 463: Business Travel Expenses.

What do you need to do?

Careful documentation is recommended to be in compliance. You must document cost, date, the business purpose, and attendees for your records and to prove to the IRS that the deductions you claim are legitimate. In your business financial reporting records, you should have clearly designated expense accounts reporting 1. travel meals, 2. qualifying business meals, 3. event meals, and 4. all other meals (meals, food and beverage supplies that are not-deductible). Meeting with your bookkeeper now to ensure they understand the rules and that transactions are properly accounted for will save you time and grief when it’s time to file your taxes.