How Much of Your Business Meals and Entertainment Is Actually Deductible?
Since the Tax Cuts and Jobs Act took effect in 2018, the rules for deducting meals and entertainment changed significantly, and many business owners are still surprised by how the two categories are treated differently. Business meals remain 50% deductible when they meet IRS requirements, but entertainment expenses โ think concert tickets, golf outings, or sporting events โ are now 0% deductible, even if a client is present and business is discussed.
To qualify for the 50% meal deduction, the expense can't be lavish or extravagant, a business owner or employee must be present, and the meal must serve a genuine business purpose, such as discussing a deal with a client or vendor. Simply buying lunch for yourself while working doesn't count โ the deduction is meant for meals tied to actual business activity.
Entertainment, on the other hand, lost its deduction entirely under current law, regardless of how directly it's tied to business development. This is a common area where business owners overestimate their deductions, so separating meal costs from entertainment costs in your bookkeeping is essential for an accurate tax return.
Enter your meal and entertainment expenses above to see exactly how much you can deduct, and keep detailed records โ including who attended and the business purpose โ to support the deduction if you're ever audited.
Frequently Asked Questions
The Tax Cuts and Jobs Act of 2017 eliminated the deduction for entertainment, amusement, and recreation expenses starting in 2018, even if directly related to business. This applies to things like sporting event tickets, golf outings, and concerts.
A business meal is generally 50% deductible if it's not lavish, a business owner or employee is present, and it's provided to a current or potential business contact for a legitimate business purpose.
Yes, you should keep receipts along with notes on who attended and the business purpose of the meal. The IRS requires documentation to substantiate any deduction if your return is examined.