As of now, the deduction for business meals is only 50 percent — a significant change from the previous 100 percent deduction for business meals in and from restaurants, which was applicable only for the years 2021 and 2022.
Additionally, many business-generating entertainment deductions were eliminated by the Tax Cuts and Jobs Act, such as the costs associated with playing golf with customers and prospects.
To help you better understand the current situation, see the table below outlining what is not permissible under the law for 2023 and beyond.
| Amount Deductible for Tax Year 2023 and Beyond | |||
| Description | 100% | 50% | Zero |
| Restaurant meals with clients and prospects | X | ||
| Entertainment such as baseball and football games with clients and prospects | X | ||
| Employee meals for convenience of employer, served by in-house cafeteria | X | ||
| Employee meals for required business meeting, purchased from a restaurant | X | ||
| Meal served at chamber of commerce meeting held in a hotel meeting room | X | ||
| Meal consumed in a fancy restaurant while in overnight business travel status | X | ||
| Meals cooked by you in your hotel room kitchen while traveling away from home overnight | X | ||
| Year-end party for employees and spouses | X | ||
| Golf outing for employees and spouses | X | ||
| Year-end party for customers | X | ||
| Meals made on premises for general public at marketing presentation | X | ||
| Team-building recreational event for all employees | X | ||
| Golf or theater outing or football game with your best customer | X | ||
| Meal with a prospective customer at a country club following your non-deductible round of golf | X | ||
Takeaways
The table in this article covers a range of scenarios related to business meals and entertainment, including
- employee meals served by an in-house cafeteria,
- meals purchased from a restaurant for required business meetings,
- restaurant meals with clients and prospects, and
- meals consumed while in overnight business travel status.
The table also shows non-deductible expenses, such as meals with prospective customers following non-deductible rounds of golf.
Additionally, the table shows some 100 percent deductible entertainment expenses, sich as team-building recreational events for all employees and non-deductible outings with best customers, including golf, theater, or football games.
