How to Deduct Business Meals

In 2021 & 2022, business-related food and beverage expenses are 100% deductible if purchased from a restaurant, up from 50% in 2020. The increase resulted from the COVID-19 pandemic in hopes that more revenue will be generated for restaurants.

Two classic examples of a 100% business meals expense deduction are:

1. Taking a client or potential client to lunch or coffee at a local restaurant to discuss their expectations for a new home.

2. Taking your team to a holiday celebration dinner.

Any business meals not provided by a restaurant (think grocery store sushi) are only 50% deducible in 2021 & 2022.

Your tax preparer may not ask you for a copy of a receipt from a meal, but the IRS does require that you keep the itemized receipt and document:

• Attendee’s names

• Business Purpose

• Date

• Amount

• Place

The 2020 rules are expected to be in place 2023 and forward. We will keep you posted on the updated rules when the time comes!

Source: IRS Publication 463