Business Meals
Meals with clients, prospects and colleagues, and meals while traveling for business, are 50% deductible. Entertainment, such as ballgames, golf and concert tickets, is not deductible at all. On $12,000 of client meals, that is a $6,000 deduction, worth about $1,920 at a 32% bracket, but only with the right records.
Reviewed by Ebot Mbi, CPA, EA · Last reviewed October 9, 2026
Who it fits
- Owners and professionals who meet clients, referral sources and prospects over meals
- Businesses with regular travel
- Companies that host an annual staff party or picnic
- Anyone who currently lumps meals and entertainment into one account
Who it's not for
- Meals that are personal, with no business discussion or business travel attached
- Lavish or extravagant meals, which are not deductible to the extent they are excessive
- Employees who are not reimbursed, since unreimbursed employee expenses are not deductible on a federal return
How it works
A business meal is 50% deductible when it is ordinary and necessary for the business, not lavish, the owner or an employee is present, and the meal is with a current or potential client, customer, consultant or similar business contact. Meals while away from home overnight on business travel also qualify at 50%.
Entertainment is fully nondeductible. That includes tickets, rounds of golf, club dues and hunting trips. If food is bought at an entertainment event, the food is 50% deductible only when it is purchased separately or itemized separately on the bill.
Some meals remain 100% deductible: a holiday party or picnic open to all employees, meals reported as taxable compensation to the person who received them, and food provided to the public, such as refreshments at a free seminar.
Starting in 2026, meals a business provides to employees on its premises for the employer's convenience, and food in an on-site cafeteria, are generally no longer deductible. Office snacks fall in this group.
The deduction is only as strong as the record. For each meal, keep the amount, date, place, who attended, their business relationship and what was discussed.
Illustrative example
Illustrative: a consulting firm owner in the 32% bracket spends $12,000 on client meals, $8,000 on sports suite tickets, $1,500 of food billed separately at those games, and $5,000 on the all-staff holiday party.
- Client meals: $12,000 x 50% = $6,000 deductible
- Suite tickets: $8,000 x 0% = $0 deductible
- Separately invoiced food at games: $1,500 x 50% = $750 deductible
- All-staff holiday party: $5,000 x 100% = $5,000 deductible
- Total deductible: $6,000 + $0 + $750 + $5,000 = $11,750
- Tax value: $11,750 x 32% = $3,760
About $3,760 of federal income tax saved on $26,500 of spending, and none of it from the $8,000 of tickets.
The rules
| Rule | Citation |
|---|---|
| Business meals are limited to 50% of their cost. | IRC §274(n) |
| Entertainment, amusement and recreation expenses are not deductible. | IRC §274(a); Treas. Reg. §1.274-11 |
| Meals require business purpose, the taxpayer's presence, a business contact and no lavish cost; food at entertainment must be stated separately. | IRC §274(k); Treas. Reg. §1.274-12 |
| Recreational events for employees generally and meals treated as compensation are excepted from the limits. | IRC §274(e)(2), (e)(4) |
| Travel and meal expenses need records of amount, time, place and business purpose. | IRC §274(d) |
Watch-outs
- A card statement alone is not enough. Note attendees and business purpose on the receipt or in your expense app within days.
- Keep entertainment in its own account so it is not accidentally deducted.
- Office snacks and on-site employee meals changed in 2026. Re-check how they are booked.
- Spouse meals are deductible only when the spouse has a genuine business purpose for attending.
What we do
We set up your chart of accounts so meals, entertainment and 100% items are separated, review the year's spending before filing, and apply the correct percentage to each. If you are examined, we represent you and present the records.
Questions
Are meals with my own employees deductible?
A working meal with an employee for a business purpose is generally 50% deductible. An event open to all employees, like a holiday party, is 100% deductible.
Can I use the per diem rate instead of receipts?
For meals while traveling away from home, per diem rates can substitute for actual meal costs, still subject to the 50% limit. You still need records of the time, place and business purpose of the trip.
Is a client gift basket a meal?
Usually it is a business gift, which has its own small per-recipient cap. We classify it based on what was given and how.