2025 & 2026 Tax Planning

Guide to Business Meal & Entertainment Deductions

The rules for business meals and entertainment have shifted repeatedly since 2018 — and they’re changing again starting January 1, 2026. Many employer-provided meals that are deductible today will become 0% deductible in 2026.

If your business provides meals, snacks, or client entertainment, this guide is for you.

A Quick History (2018–2024)

• Before 2018: Most meals & entertainment were 50% deductible.

• 2018 (TCJA): Entertainment became 0% deductible; meals remained generally 50%.

• 2021–2022: Restaurant meals temporarily 100% deductible (COVID relief).

• 2023–2024: Back to the TCJA baseline: entertainment 0%, meals 50%.

What Changes in 2026?

Under the One Big Beautiful Bill Act, the special treatment for meals provided on your business premises disappears. Starting January 1, 2026:

• Employer-provided meals become 0% deductible.

• Snacks & beverages (coffee, fruit, break-room snacks) also become 0% deductible.

Key takeaway: In 2025, most employer-provided meals and snacks are 50% deductible. In 2026, they drop to 0%.

2025 vs 2026 Deductibility Summary

What Has Not Changed for 2026?

Certain meal expenses remain deductible at their current rates:

Business Travel Meals: Meals incurred while traveling away from home for work remain 50%deductible.

Client/Prospect Meals: Meals with current or potential clients to discuss business remain 50%deductible, provided they are not lavish or extravagant and you (or an employee) are present.

Employee Social Events: Food and beverages for recreational or social activities open to allemployees (e.g., holiday parties, annual picnics) remain 100% deductible.

Public Events: Meals served during promotional or public-facing events (e.g., seminars, product    launches) remain 100% deductible.

Taxable Compensation: Meals treated as taxable compensation to the employee and included on their W-2 remain 100% deductible by the employer.

Category Details & Examples

Entertainment – Not Deductible

This includes:

• Client sporting events

• Golf outings

• Concerts & shows

• Club memberships

If you buy a separate meal before or after the event, that meal may still qualify for a 50% deduction.

Business Meals – 50% Deductible

Requirements (unchanged):

• You or an employee must be present.

• Business must be discussed.

• The meal cannot be lavish or extravagant.

• You have to DOCUMENT, DOCUMENT, DOCUMENT!

Employer-Provided Meals – Major Change in 2026

In 2025: 50% deductible
In 2026: 0% deductible

Company-Wide Events – Always 100% Deductible

• Holiday party

• Company picnic

Documentation Best Practices

• Receipt with date, vendor, and cost

• Names of attendees

• Business purpose

• Location/context

Preparing for 2026

• Enhance docuementation

• Update your accountable plan

• Update your chart of accounts

• Revise meal/snack policies

• Train staff on documentation

• Adjust your 2026 budget

Need help customizing this for your busAiness?
Tandy Consulting can help you categorize, document, and plan for the 2026 deduction changes.

Adulting time:

No Legal or Tax Advice:
The information provided in this article is based on federal tax law, Treasury regulations, IRS guidance, and available interpretations as of the published date. Tandy Consulting Inc. does not provide legal advice, and nothing herein should be interpreted as creating an attorney-client relationship. Readers should consult with their attorney or qualified tax professional before acting on any information contained in this publication.

California-Specific Notice:
Pursuant to California law, any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of:

1. Avoiding tax-related penalties under federal or California law, or

2. Promoting, marketing, or recommending any tax-related matter to another party.

Dynamic and Evolving Law Notice:
The provisions of the One Big Beautiful Bill Act (OBBBA) and related amendments to Internal Revenue Code §§ 119, 132, 162, 274, and related regulations are subject to ongoing IRS and Treasury guidance, technical corrections, and potential legislative revisions. California conformity to federal changes may lag behind or differ in application. As of the post date, certain portions of the law remain dynamic, interpretive, and not fully settled. Requirements, limitations, and effective dates may change as additional regulatory guidance is released.

Limitation of Reliance:
This material is provided “as is” and is not guaranteed to be complete, current, or error-free. Tandy Consulting Inc. makes no warranties, express or implied, regarding the accuracy or applicability of the information for your specific situation. Readers are strongly encouraged to obtain personalized advice before taking action or refraining from action based on this article.

No Client Relationship Created:
Reading this article does not establish a tax-advisor–client relationship with Tandy Consulting Inc. or any of its team members. Such a relationship is formed only through a signed engagement agreement.