Business Meal Deductions: What You Can (and Can't) Write Off

Under IRC § 274(n), business meals are generally deductible at 50% of the cost. If you spend $100 on a business lunch with a client, you can deduct $50. This has been the standard rule for decades, and after a brief pandemic-era exception, it's firmly back as the baseline for 2024 and beyond.

The 50% limitation applies to food and beverages consumed in connection with your trade or business. It covers meals with clients, prospects, business partners, and colleagues — as long as you meet the substantiation requirements (more on that below).

The logic behind the 50% limit is that the IRS considers part of every meal to be personal (you have to eat regardless of whether it's a business meal), so they only allow a deduction for the "business" half.

Not every meal you eat while working qualifies for a deduction. The IRS requires that the meal be directly related to or associated with the active conduct of your trade or business. In practical terms, this means:

The meal must have a clear business purpose. You're discussing a project with a client, negotiating a deal, reviewing work with a contractor, or having a substantial business discussion. Simply eating near your laptop doesn't count.

The expense must not be lavish or extravagant. This doesn't mean you can't eat somewhere nice — it means the cost should be reasonable for the circumstances. A $200 dinner with an important client is fine. A $2,000 dinner for two is going to raise questions.

You or your employee must be present. You can't just buy someone a gift card to a restaurant and call it a business meal. Someone from your business needs to be at the table.

During 2021 and 2022, Congress temporarily allowed a 100% deduction for business meals purchased from restaurants (the Consolidated Appropriations Act of 2021). This was designed to help the restaurant industry recover from COVID-19 shutdowns.

That provision expired on December 31, 2022. For the 2023 tax year and beyond — including 2024 — all business meals are back to the standard 50% deduction, regardless of whether they're from a restaurant, a food truck, or a catering company.

This catches some business owners off guard. If you've been deducting 100% of restaurant meals, you need to adjust your recordkeeping and expectations. The 50% limit is the rule going forward with no current plans for reinstatement.

This is one of the most important distinctions in tax deduction law, and it's where many business owners make costly mistakes.

Entertainment is NOT deductible. Period. Since the TCJA eliminated the entertainment deduction in 2018, you cannot deduct tickets to sporting events, concert tickets, golf greens fees, theater outings, or any other entertainment — even if clients attend and you discuss business.

Meals are 50% deductible when they meet the business purpose and documentation requirements.

The confusion arises when meals and entertainment overlap. If you take a client to a baseball game and buy hot dogs and beer at the stadium, the tickets are nondeductible entertainment, but the food may be deductible as a business meal — if you keep it on a separate receipt or the invoice clearly itemizes the food cost.

The IRS has been clear: meals must be stated separately from entertainment on receipts and invoices to be deductible. If a single charge covers both dinner and show tickets with no breakdown, the entire amount is treated as entertainment (nondeductible).

Business meal deductions are one of the most commonly audited expense categories. The IRS expects you to document five elements for every business meal, as outlined in IRC § 274(d) and IRS Publication 463:

1. Amount — The total cost of the meal (before applying the 50% limit). Include tax and tip.

2. Date — When did the meal take place?

3. Place — The name and location of the restaurant or establishment.

4. Business purpose — What business was discussed? This doesn't need to be a novel — a brief note like "Discussed Q3 marketing strategy with client" is sufficient.

5. Business relationship — Who attended and what is their business relationship to you? "Lunch with Jane Smith, client (ABC Corp)" covers it.

Without these five elements documented contemporaneously (at or near the time of the meal), your deduction is at risk in an audit. The simplest approach: snap a photo of the receipt and add a note about the business purpose and attendees right away.

When you're traveling away from your tax home for business, meal expenses get easier to justify — but they're still subject to the 50% limit.

You can deduct meals while traveling if the trip is primarily for business and you're away from your tax home long enough to require rest or sleep (generally, overnight travel). This includes meals eaten alone while traveling — you don't need a business companion.

There are two approaches to tracking travel meals:

Actual expense method — Keep receipts for every meal and deduct 50% of the actual costs.

Per diem method — Use the federal per diem rates (which vary by location) instead of tracking actual receipts. The IRS publishes these rates annually. Using per diem simplifies recordkeeping but may result in a smaller deduction if your actual costs exceed the per diem rate.

Regardless of which method you use, you still need to document the dates, locations, and business purpose of your travel.

If you have employees, there are some special rules worth knowing:

Occasional meals provided to employees for the convenience of the employer (such as meals during overtime or late-night work sessions) are 50% deductible.

Company-wide events — Meals provided at holiday parties, summer picnics, and similar events that are open to all employees are 100% deductible as a de minimis fringe benefit. This is one of the few remaining 100% meal deductions.

Snacks and coffee provided in the office on a regular basis are 50% deductible. The days of the fully deductible office snack bar ended when the TCJA changed the rules for employer-provided meals.

Note that employer-provided meals in an on-premises cafeteria that were previously excluded from employee income under IRC § 119 saw their favorable tax treatment change under TCJA. These meals are now 50% deductible to the employer (previously 100%) and this treatment continues through 2025.

For freelancers and sole proprietors, these employee meal rules don't apply since you can't be your own employee. Your meal deductions follow the standard business meal rules discussed above.