How Business Owners Can Deduct Meals and Entertainment Expenses
If you're a business owner, chances are you’ve grabbed coffee with a client, taken your team to lunch, or hosted a business dinner. But here’s the question: Are you writing any of that off?
Because if you’re not, you might be missing out on valuable tax savings.
Let’s dive into how the meals and entertainment deduction works—and how you can use it wisely (and legally) to reduce your taxable income.
What You Can Deduct (and What You Can’t)
In the past, both meals and entertainment expenses were partially deductible. But under the 2017 Tax Cuts and Jobs Act, most entertainment expenses are no longer deductible—even if they’re business-related.
Here’s a quick breakdown:
- Business meals with clients or prospects – 50% deductible
- Meals during business travel – 50% deductible
- Company holiday parties or team picnics – 100% deductible
- Tickets to games, concerts, or golf outings – Not deductible
So if you’re wondering, “Can I deduct entertainment expenses for business?”—the answer is usually no.
What the IRS Looks For
The IRS doesn’t just take your word for it. To qualify for a meals and entertainment tax deduction, you need proper documentation. That includes:
- Date of the meal
- Amount spent
- Name(s) of who attended
- Business purpose of the meal
And yes, you’ll need to keep the receipt. Pro tip: jot a quick note on the back of the receipt explaining the meeting. Your future self (or your tax pro) will thank you.
How Much Can You Deduct?
This is where it gets a bit nuanced. Most business meals fall under the 50% deduction rule, meaning you can write off half the cost. But there are exceptions where the meals are 100% deductible, such as:
- Office parties
- Meals provided for the employer’s convenience (e.g., working lunch in the office)
Some business owners ask: “Are meals deducted 100% for business owners?” Only in special cases like the above. In most other situations, the standard 50% applies.
Avoiding the Pitfalls
It’s tempting to lump every meal into a deduction category, but that’s a surefire way to invite an audit. You need to be intentional. When it comes to deductible meals and entertainment, make sure each expense is directly tied to a business activity.
Use separate categories in your bookkeeping software. One for meals, one for entertainment (if any), and a third for 100% deductible events. This level of detail helps you—and your CPA—avoid confusion.
How to Track Your Expenses the Right Way
The IRS expects accuracy. A random pile of receipts won’t cut it. Here’s what to do instead:
- Keep digital copies of receipts using apps or your accounting software
- Maintain a log of who you dined with and why
- Categorize expenses as you go—not months later
This is especially important when navigating meals and entertainment deductibility rules. The cleaner your records, the stronger your tax position.
FAQs
What meals can a business owner deduct on taxes?
You can deduct 50% of meals that are business-related—like dining with clients or meals while traveling for work.
Can I deduct entertainment expenses for business?
No. Most entertainment costs (like concerts or games) aren’t deductible anymore, even if business is discussed.
What are the IRS rules for deducting meals and entertainment?
Meals must be ordinary, necessary, not lavish, and tied to business. Entertainment is generally non-deductible.
Are meals deducted 100% for business owners?
Only in special cases—like company parties or meals provided to employees for the employer’s convenience.
How do I keep records for meals and entertainment deductions?
Track the date, amount, location, who was there, and the business purpose. Save your receipts.
Every Bite Counts
When you add up all your eligible expenses over the year—lunches, coffees, travel meals—it can easily reach thousands of dollars. If you're not tracking and deducting them correctly, you're leaving money on the table.
So eat smart. Record smarter.
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