What types of meal and entertainment expenses are 100% deductible on a business return?
Businesses can fully deduct the cost of:
- Office parties and outings held for the benefit of its employees (other than highly-compensated employees);
- Meals and entertainment provided to employees as compensation and reported as taxable wages;
- Meals and entertainment expenses reimbursed to employees upon submission of employee expense reports.
Things like free coffee, donuts, and snacks provided at the workplace, as well as onsite meals for employees working overtime are considered “meals provided for the convenience of the employer.” In 2017 and prior tax years, these were 100% deductible. Under the Tax Cuts and Jobs Act (TCJA) that Congress signed into law on December 22, 2017, these are now 50% deductible in tax years 2018 through 2025, and nondeductible after that.
Also, the TCJA has suspended all other entertainment expense deductions in 2018 through 2025. Prior to that, businesses were allowed to deduct 50% of the face value of entertainment tickets and events and 100% of the cost to qualified charitable events, if the purpose was business-related.