Meals and Entertainment Deductions for 2023 | 50% vs 100% (2024)

Meals and Entertainment Deductions for 2023 | 50% vs 100% (1)

Estimated reading time: 3 minutes

Knowing what meals and entertainment deductions you can take for your 2023 taxes can bepretty confusing.What is fully deductible, what is only50% deductible, andwhat isn’tdeductible atall?

And once you know all that, how doyou tell the difference?

It all comes down towhat is the purpose of the meal/event and who is benefitting from it.

In the past, it was commonplace to use wining, dining ANDentertaining as a way to woo clients. This was a great deal because you could write-off the box seats or the golf game, etc.

But recently, the IRS clarified a few things on the Tax Cuts and Jobs Act (TCJA) of 2018 regarding meals and entertainment deductions.One of the biggest changes is that deductions are no longer allowed for entertainment expenses, except for certain employee events.

In 2021, Congress passed a temporary tax incentive called the “Consolidated Appropriations Act” or CAA. As part of that, the 50% deduction for business meals was increased to 100% through the end of 2022. But the deduction was temporary, intended to boost the restaurant industry during COVID, and the rules have gone back to a 50% deduction for most business meals.

What isConsidered aTax-DeductibleExpense?

There is still plenty of room for fun with deductions. You just have to be careful about what you’re doing so you can take them. Here’s a quick overview:

Meals and Entertainment Deductions for 2023 | 50% vs 100% (2)

100% Deductible

Here are some examples of 100% deductible meals and entertainment expenses:

  • Thecompanyholiday party orsummerpicnic (You can still have tax-deductible fun with your employees!)
  • Business-promoting meals provided to the public, such as an open house.
  • Meals provided as taxable compensation to employees (included on a W-2)
  • Business meals that a critical part of your business function (ex. if you’re a food critic or food blogger)
  • Meals provided to an employee at work,suchasif they’re working late
  • Meals provided as taxable compensation to employees or independent contractors, and included on the W2
  • Meals sold to a client or a customer

50% Deductible

Here are some examples of 50% deductible meals and entertainment expenses:

  • Business meals with clients or colleagues
  • Meals while traveling on business
  • Treating a few employees to a meal (Note –if it’s at least half of all employees, it’s 100% deductible!)
  • Food for an in-office meeting
  • Meals at conferences
  • Office snacks

WhatExpenses areNOTDeductible?

  • Entertaining a client or customer, whether or not business is discussed
  • Tickets to sporting events, even if business is discussed
  • Lavish or extravagant expenses
  • Club fees or membership dues
  • Entertainment facility leasing

This may change a few things about how you do business. Instead of doing businessin a box at an NBA game, you maybe better off to wine and dineyour clients and customers because it’ll be 50% deductible instead of 0% deductible.OR the food at the entertainment can be deductible IF it is billed separately from the entertainment itself.

Make sure that you are reviewing meals and entertainment expenses to be sure you are properly applying the deductions.

What Entertainment Expenses ARE Deductible?

Some employee entertainment costs can still be deducted:

  • Employee holiday party expenses
  • Expenses for employee award or incentive trips
  • Entertainment that is included in employees’ wages, and are reflected on their W2s (though there are some exceptions for highly compensated employees

Criteria for Meals and Entertainment Deductions

In order to deduct business meals, you must be self-employed or operating a business. Employees on W2s no longer qualify for business meals deductions.

The meal expense must be ordinary and necessary in carrying on your business, meaning it cannot be lavish or extravagant.

You, as the business owner, or your employee must be present with at least one other party present (ex. a client or colleague). This does not apply while you or your employees are traveling for business or conferences.

What Are the IRS Requirements for Meal Receipts?

You must keep a proper record of the meal:

  • The amount (delivery fees, taxes, and tips can be included)
  • The time and place of the meal
  • The business purpose of the expense, and
  • The business relationship between the taxpayer and the individuals being fed.

If you’d like to reviewthe law yourself, you can find ithere.

We don’t do tax preparation, but we can certainly help you get your financials in order so you’re ready to talk to your tax guy. Click here for our services page.

Also, if you’d like to stay up-to-date with the latest ecommerce news, subscribe to our newsletter (the signup is in the sidebar ->). Every week we pull together the most important news for ecommerce and business finance. The goal is to help you stay informed so you can be aware of things as they happen and adjust things in your business as necessary.

Meals and Entertainment Deductions for 2023 | 50% vs 100% (2024)


Meals and Entertainment Deductions for 2023 | 50% vs 100%? ›

The business meals deduction for 2023 allows taxpayers to write off 50% of meal costs. This is quite a change from the meals and entertainment deduction in 2022, which allowed 100% of meal costs to be written off. If you're looking for other business deductions to write off, use a 1099 tax calculator.

Are meals still 100% deductible in 2023? ›

Unfortunately, the 100% meal deduction sunset for 2023. However, there are still significant business meal tax saving opportunities for 2023. Following is an overview of the meals and entertainment deduction changes, IRS rules regarding the deductions, and recordkeeping tips.

What qualifies for 100% meal deduction? ›

Here are some common examples of 100% deductible meals and entertainment expenses: A company-wide holiday party. Food and drinks provided free of charge for the public. Food included as taxable compensation to employees and included on the W-2.

Are meals 100% deductible in 2024? ›

This temporary rule had food and beverages 100% deductible if purchased from a restaurant in 2021 and 2022. However, for purchases made from 2023 onward, the rules revert to how they were defined in the Tax Cuts and Jobs Act. This means purchases for business-related meals are back to only 50% deductible.

How much is the IRS meals allowance for 2023? ›

The amount of the $309 high rate and $214 low rate that is treated as paid for meals for purposes of § 274(n) is $74 for travel to any high- cost locality and $64 for travel to any other locality within CONUS.

What meals and entertainment are deductible in 2023? ›

As of January 1, 2023, that temporary incentive has expired, and the rules have gone back to a 50% deduction for most business meals. Although the business meals rule has reverted back, entertainment is still not tax deductible.

Are travel expenses 100% deductible? ›

The IRS won't deduct 100% of your transportation costs unless the trip is primarily for business and lasts longer than an ordinary day's work. Being longer than an ordinary day's work. You can't write off expenses from a day trip. If your trip involves an overnight stay, then the travel qualifies for a deduction.

Is Starbucks 100% deductible? ›

You go to the Starbucks across the street from the hotel each day to get breakfast and your morning coffee prior to your work meetings. You can deduct 100 percent of the expense because Starbucks prepares and sells food or beverages to retail customers for immediate consumption.

Are groceries a tax write-off? ›

While most groceries are considered personal expenses and are not tax-deductible, there are certain situations where some types of groceries can qualify for deductions. It is important to note that these deductions are generally applicable to businesses or specific scenarios.

Does IRS require itemized receipts for meals? ›

The IRS requires that all meal expenditures must document the following information (regardless of cost): List of attendees (self if alone) The business purpose of the meal (topic of discussion) The cost (supported by receipt)

Can I write off my lunch at work? ›

If you're a sole proprietor, you can deduct ordinary and necessary business meals and entertainment expenses. However, these expenses must be directly related to or associated with your business. If you're an employee, you can deduct these only to the extent your employer doesn't reimburse you.

Can I write off concert tickets? ›

For example, if you attend a concert by a musician in your genre, that ticket can be written off. However, if you attend a concert by a completely unrelated artist, that ticket cannot be written off.

What are the IRS requirements for meals and entertainment receipts? ›

In addition to recording the information in your account book, etc., receipts are required for all expenses of $75 or more. Each receipt should include the date, place, person entertained, type of entertainment, business purpose, and business relationship.

Are business meeting meals 100% deductible? ›

The following types of expenses are 100% deductible:

Meals provided in the office during meetings of employees, stockholders, agents, or directors, if the meals are provided by a restaurant. Meals during business travel. Meals at a seminar or conference.

Can I write off my lunch if I am self-employed? ›

Meal Expenses in Your "Tax Home"

Self-employed filers can deduct an expense if it is necessary for business. An ordinary meal taken during your lunch break is not deductible unless you're traveling and cannot eat the meal within a reasonable distance of your tax home.

Is alcohol deductible as meals and entertainment? ›

How do I write off alcohol as a deduction in 2023? If you're looking to write off any business meals (that can include alcohol), you'll need to report it on Schedule C and attach it to the standard Form 1040 when you file your tax return.

Are meals for employees 100% deductible? ›

Meals with employees or business partners are only deductible if there is a direct or indirect business purpose. Meal expense that are 100% deductible: Recreational expenses primarily for employees who are not highly compensated, such as the business holiday party or the company picnic.

What is the deductible in 2023? ›

The standard deduction for 2023 is: $13,850 for single or married filing separately. $27,700 for married couples filing jointly or qualifying surviving spouse. $20,800 for head of household.

What is the standard deductible for 2023? ›


What business expenses are 100% deductible? ›

Office equipment, such as computers, printers and scanners are 100 percent deductible. Business travel and its associated costs, like car rentals, hotels, etc. is 100 percent deductible. Gifts to clients and employees are 100 percent deductible, up to $25 per person per year.


Top Articles
Latest Posts
Article information

Author: Virgilio Hermann JD

Last Updated:

Views: 5387

Rating: 4 / 5 (41 voted)

Reviews: 80% of readers found this page helpful

Author information

Name: Virgilio Hermann JD

Birthday: 1997-12-21

Address: 6946 Schoen Cove, Sipesshire, MO 55944

Phone: +3763365785260

Job: Accounting Engineer

Hobby: Web surfing, Rafting, Dowsing, Stand-up comedy, Ghost hunting, Swimming, Amateur radio

Introduction: My name is Virgilio Hermann JD, I am a fine, gifted, beautiful, encouraging, kind, talented, zealous person who loves writing and wants to share my knowledge and understanding with you.