The Tax Cuts and Jobs Act resulted in the most sweeping changes to the tax code in decades. It affected not just individuals but corporations and small business owners.

One such change was for the deduction of meals and entertainment. As of 2018 entertainment, including expenses for recreation, are no longer deductible. Gone (at least for now) are the days when you could take a potential client to a concert or a ball game and write off the tickets.

Thankfully the ability to write off certain meals is still an option. Typically if you go out to eat with a client, or potential client, you can deduct 50% of the expenses. The purpose of the meeting must be to discuss business and records or receipts of the meeting must be kept.

Can I Deduct Meals For My Employees?

It’s not uncommon for employees to work late, particularly during busy times of the year. There are instances where you, as the employer, may purchase meals for employees who work beyond normal work hours. The expenses could be deductible because the meals were for the convenience of the employer.

The IRS guidelines for meals notes that the expenses are deductible when they are:

  • Ordinary and necessary
  • Not lavish
  • Provided when the employer is present
  • Consumed while meeting with a current or potential customer
  • Purchased separately, or stated separately, if provided during an entertainment venue

A business has more impact on the food choices of its employees than previously thought. Employees who skip meals are not as productive. Additionally, a recent study showed that employees generally will eat healthier food options if they are provided by the employer.

If you are willing and able to throw a holiday party those costs can be written off as well. Expenses for holiday parties or company picnics are fully deductible and not subject to the 50% limitation.

From time to time an employee may need to travel away from the office for business. If it is necessary to stop for substantial sleep or rest to properly perform, the employee’s meals are deductible.

The Tax Cuts and Jobs Act allows these deductions through 2025. Like all business payments it is important to keep good financial records and maintain receipts to substantiate your expenses.