Meals incurred while traveling for business or provided to clients, customers or employees are deductible as long as they are ordinary and necessary. It is important to keep a log of when the meal took place, the business purpose of the meal, and who you met with. The expenses cannot be extravagant. While entertainment is no longer deductible, the costs of food and beverages at a venue are still deductible if stated on a separate receipt. As of January 1, 2023, the meal deductions are as follows:
Most business meals are limited to a 50% deduction. This includes meals while traveling or meals at conventions or meetings.
If your meal was reimbursed, there is no deduction.
100% meals deduction will apply in the following circumstances:
1. Meals provided to the public for advertising or goodwill
2. Meals provided to employees for social events
3. Meals you sell to the public (ie a restaurant)
Self-employed taxpayers have the option to take a per diem rate for meals incurred while traveling or to reimburse employees at the per diem rate instead of using actual receipts. Per diem rates vary by state.
Transportation workers have special rules of 80% of meals.
