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BUSINESS MEAL DEDUCTIBILITY

A 1993 federal law reduced the deductibility for business meals and entertainment from 80 percent down to 50 percent. Items that are 50 percent deductible include:

  • travel meals (examples are truckers, salespeople who eat meals away from home)
  • business meals
  • catered meals (including meals catered to a person's home or place of business)
  • employer-provided meals to employees (employers other than restaurateurs) cover charges at night clubs if used for entertainment purposes amount paid to rent a room for a reception
  • parking at an event which is an entertainment deduction

    Items that are 100 percent deductible include:
    • company picnics/holiday parties
    • holiday turkeys or similar gifts
    • samples or promotional items
    • restaurant/catering food costs associated with selling to bona fide paying customers
    • employer-provided meals in which the employee pays fair market price (employer is not restaurateur or caterer)
    • meals provided to restaurant/catering employees by employer on the premise
    • meals and entertainment provided by employer as wages or compensation to employee

    Release Date: 12/29/2000 12:00:00 AM