Deduction for Business Meals Increases in 2021 and 2022

Can you deduct business meals?  In the past this answer was not so straightforward.  The recently signed appropriations bill makes it easier to deduct business meals.

In the past ordinary and necessary food and beverage expenses of operating a business have been deductible but were subject to a 50% limitation for tax purposes.  The recently passed legislation removes this 50% limitation for food and beverages provided by a restaurant for calendar years 2021 and 2022.  The legislation was carefully worded to not require the meals to be on location at the restaurant, so takeout and delivery meals can be fully deductible.

It is important to note that, other than lifting the 50% limit for restaurant meals, the legislation doesn’t change the rules for deducting business meals. All the other existing requirements continue to apply. Thus, to be deductible:

• The food and beverages can’t be lavish or extravagant under the circumstances.
• You or one of your employees must be present when the food or beverages are served.
• Must be with a prospective customer, client, supplier, employee, agent, partner, or professional adviser with whom you could reasonably expect to engage or deal in your business.

Food or beverages provided at an entertainment activity are still nondeductible, unless they are purchased separately from the entertainment on a separate bill, receipt, or invoice.

If you have any questions on the Consolidated Appropriations Act, your DWD professional advisors are available to help.

Contributed By: Jessica Ogle, CPA | Partner | DWD CPAs & Advisors