Business Meals and Entertainment Deduction: 2025 Rules After the TCJA Changes

By Yarik Yarosh, CPA ·September 5, 2026 ·6 min read

Written by Yarik Yarosh, CPA (US & Canada) September 5, 2026 · FL CPA license AC61704 · CPA Ontario

The deductibility of business meals and entertainment is one of the most frequently misunderstood areas of tax law. After the Tax Cuts and Jobs Act (TCJA), entertainment expenses are completely nondeductible (0%), while business meals remain 50% deductible under IRC 274. The temporary 100% deduction for restaurant meals (2021-2022 under the Consolidated Appropriations Act) has expired, and business meals are back to the standard 50% rate for 2023 and beyond. The key distinction is whether the expense is a “meal” (food and beverages) or “entertainment” (amusement, recreation). A meal at a restaurant with a client to discuss business is 50% deductible. Tickets to a football game with the same client are 0% deductible. If the meal and entertainment are purchased together (e.g., a suite at a sporting event includes food), the food portion must be separately stated on the invoice to be deducted at 50%.

✓Key takeaway

2025 deduction rates:

Expense Type	Deduction Rate	Notes
Business meals with client/prospect	50%	Must have business purpose and documentation
Business meals while traveling	50%	Away from home overnight
Meals at business meetings/seminars	50%
Office snacks and coffee (for employees)	50%	De minimis fringe, 50% deductible
Holiday party or company picnic (all employees)	100%	Primarily for employees (IRC 274(e)(4))
Entertainment (sporting events, concerts, golf)	0%	TCJA permanent elimination
Client gifts	100% (up to $25 per recipient per year)	IRC 274(b)
Meals provided on employer premises (convenience of employer)	50%	Was 100% through 2025 under TCJA, now 50%

The 50% meal deduction requirements:

Requirement	Details
Business purpose	Directly related to or associated with active conduct of business
Business associate present	Taxpayer, client, prospect, employee, advisor, or supplier
Not lavish or extravagant	Reasonable under the circumstances (no hard dollar limit)
Documentation (IRC 274(d))	Amount, date, place, business relationship, business purpose
Receipt required	Yes, for expenses over $75 (but best practice for all amounts)

Entertainment vs. meals (the critical distinction):

Entertainment (0% Deductible)	Meals (50% Deductible)
Sporting event tickets	Restaurant dinner with client
Concert tickets	Coffee meeting with prospect
Golf greens fees	Lunch during business meeting
Theater tickets	Catered meals at office meeting
Country club dues	Food at a trade show booth
Vacation trips	Room service while traveling for business
Hunting/fishing trips	Meal separately stated on entertainment invoice

How do the meal deduction rules work in practice?

Hypothetical example

Round numbers. A consulting firm. S-Corp. Annual spending on meals and entertainment:

Expense analysis:

Expense	Annual Amount	Category	Deductible?	Deduction
Client lunches (50 lunches x $80)	$4,000	Meal	50%	$2,000
Prospect dinners (20 dinners x $200)	$4,000	Meal	50%	$2,000
Travel meals (30 trips x $100/day x 3 days)	$9,000	Meal	50%	$4,500
Office coffee/snacks	$1,200	Meal (de minimis)	50%	$600
Annual holiday party (all employees)	$3,000	Employee event	100%	$3,000
Client golf outings (10 x $500)	$5,000	Entertainment	0%	$0
Sporting event tickets (8 x $300)	$2,400	Entertainment	0%	$0
Client gifts (20 x $25)	$500	Gift	100%	$500
Total spending	$29,100			$12,600

Tax savings (24% bracket): $12,600 x 24% = $3,024 in federal tax savings

The separately stated meal strategy: For the $5,000 in golf outings, if the club invoices include food and beverages separately:

Golf Outing Invoice	Before	After (Separately Stated)
Greens fees	$300	$300 (0% deductible)
Cart rental	$50	$50 (0% deductible)
Lunch at clubhouse	$100	$100 (50% deductible)
Drinks/snacks	$50	$50 (50% deductible)
Total	$500	$500
Deduction	$0	$75 ($150 meals x 50%)

By having the golf club separately state the food portion on the invoice, the firm recovers a $750/year deduction (10 outings x $75) that would otherwise be lost.

Per diem alternative for travel meals: Instead of tracking actual meal expenses while traveling, the firm can use the GSA per diem rates:

City	Standard M&IE Rate	High-Cost City Rate
Most U.S. cities	$68/day	N/A
New York, San Francisco, etc.	N/A	$79/day

Per diem advantages:

Factor	Actual Method	Per Diem
Receipt tracking	Required for every meal	Not required (only need travel dates and destinations)
Amount deductible (50%)	Varies	$34/day (standard) or $39.50/day (high-cost)
Administration	High	Low

For the firm’s 90 travel days: Per diem deduction = 90 x $68 x 50% = $3,060 (vs. $4,500 under actual). The actual method produces a higher deduction if actual spending exceeds the per diem rate, but the reduced record-keeping may justify the lower deduction.

Documentation requirements (IRC 274(d)): For every business meal, the firm should record:

Element	Example
Amount	$120
Date	March 15, 2025
Place	Nobu Restaurant, Miami
Business relationship	John Smith, prospective client
Business purpose	Discussed consulting engagement for Q2 project

A simple note on the receipt or a log entry is sufficient. The IRS doesn’t require a formal document, but the information must be recorded “at or near the time of the expenditure” (contemporaneous). A reconstruction of meal records at year-end is weaker evidence but may be accepted with corroborating information (credit card statements, calendar entries).

Meals that are 100% deductible (exceptions to the 50% rule):

Situation	Deduction Rate
Holiday party or picnic for ALL employees	100%
Meals as part of a charitable event (full amount to charity)	100% (as charitable contribution)
Meals included in employee compensation (reported as income)	100%
Meals sold to customers (restaurant business)	100% (COGS)
De minimis meals provided to employees working overtime	100% (if occasional)
Food samples for marketing/promotion	100% (advertising expense)

Illustrative numbers only, not a real client and not advice for your facts.

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Cite this page

Yarik Yarosh, CPA. "Business Meals and Entertainment Deduction: 2025 Rules After the TCJA Changes." Blue Cloud CPA, September 5, 2026. https://bluecloudcpa.com/guides/small-business-meals-entertainment-deduction-2025-rules

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.