Back in 2020, the Consolidated Appropriations Act (CAA) was signed in an effort to support restaurants impacted by the COVID-19 pandemic, and it allowed companies to deduct 100% of business expenses. However, the CAA ended on January 1, 2023, and now meal and entertainment deductions have reverted to the limits enacted under the Tax Cuts and Jobs Act (TCJA). For tax year 2023, a large percentage of business meal deductions will be 50% deductible, but entertainment deductions remain non-deducible under TCJA.
Here is a handy guide on how to deduct meals and entertainment in 2023:
Examples of 100% deductible meals and entertainment expenses:
- Food and beverages provided at no charge for the public
- Food included as taxable compensation to employees and included on the W-2
- A company-wide party
Examples of 50% deductible meals and entertainment expenses:
- Client business meals (that isn’t excessively opulent)
- Food to supply a board meeting
- Rewarding some (less than half) employees with a meal
- Meals in office during meetings
- Meals provided for employees working late
- Employee meals at a conference that are not included in the price of conference entry
- Employee meals while traveling
- Office snacks and meals
Examples of expenses that are not deductible:
- Entertainment for clients, such as golf, concert tickets, etc.
Should you have any questions on how to deduct meals and entertainment in 2023, please contact us for more assistance.