Business Meal & Entertainment Deductions: The Complete Guide

Business meal and entertainment deductions can be a valuable tax break if you know how to use them. The Tax Cuts and Jobs Act (TCJA) remains the framework for how these deductions work today, but IRS clarifications mean the details can still be tricky.

This guide breaks down what’s deductible, what’s not, and how to keep records that hold up under IRS scrutiny.

Meals You Can Deduct at 100%

Some employee meals are fully deductible when they meet IRS requirements.

• De Minimis Meals – Snacks, coffee, donuts, or similar food provided on-site for your team’s convenience. These can be occasional or ongoing, as long as they primarily benefit the employer, not identifiable as "free food as a perk."
• Company Events – Meals at parties, picnics, holiday gatherings, or similar events open to all staff. 
• Meals Included in Employee Compensation – If the cost of a meal is included in an employee’s taxable wages, it’s 100% deductible. 

Examples: Bagels in the break room for employees, Friday lunch for the whole team, or a catered dinner for a holiday party.

Meals You Can Deduct at 50%

Business and travel meals must be directly related to the active conduct of your trade or business, not just a social occasion.

• Business Meals with Clients or Prospects – A legitimate business discussion must take place, you (or an employee) must be present, and the meal must not be lavish or extravagant. The IRS looks at whether the cost is reasonable for the occasion.

“Lavish or extravagant” test: A steakhouse can be fine; a luxury tasting menu with champagne pairings may raise questions.   

• Meals While Traveling for Work – Any meal consumed while away from your tax home on business (e.g., breakfast before a trade show or dinner after client meetings). In rare cases, travel meals tied to company-wide events (like a retreat) may be 100% deductible, but only if they meet IRS requirements.

As long as you can prove you were away from your tax home for work purposes, your company pays for the meals, and if you don't have receipts, you can exclude from an employee's taxable wages (and the business may deduct) amounts that the IRS calls "per diem" amounts. Those are rates for meals and lodging that the IRS deems as reasonable.

Example: Dinner near your hotel after presenting at an industry conference.
🔍See also: Write Off Business Travel Expenses for more on what qualifies.

Meals That Aren’t Deductible

Some meal expenses are off-limits, no matter the circumstances.

• Entertainment Meals – If the meal is tied to an entertainment activity and buried in the cost of the entertainment, (like a golf outing), it’s not deductible.
• Bundled Meals & Entertainment – But when the meals are clearly identified and specified in the total bill, then you may deduct the meals portion of the total bill.

Common Mistakes to Avoid

 Deducting entertainment costs as meals

 Failing to separate bundled meal and entertainment charges

 Not keeping receipts or relying only on credit card statements

 Skipping the business purpose in documentation

Meal Deduction Checklist

 Record the date and location of the meal. 

 Note who attended and their business relationship. 

 Keep itemized receipts—not just credit card slips. 

 Write a short description of the business purpose discussed. 

 For travel meals, document the business reason for travel. 

 Store records in a secure, organized way—digital is best.

How Do You Keep Track of It All?

With the right software and a smart process, keeping track of receipts and expenses is a breeze.

Our clients use tools like Dext (for snapping and categorizing receipts) and Ramp (for tracking card expenses and syncing with accounting software) to save hours of admin work. These tools keep expenses fully accounted for and deductions supported with IRS-ready documentation, so nothing slips through the cracks.

Are you missing out on tax-saving opportunities for your business? Schedule a call to see how monthly accounting can help you plan ahead and make sure no deduction you qualify for goes unclaimed.