Certain Meals Will Be 100% Tax-Deductible for Businesses in 2021 and 2022

Practice Areas

By  Pooja Srivastava and Ashleen Sahni

Businesses can now deduct 100% of certain meal expenses for tax years 2021 and 2022 under the Consolidated Appropriations Act, 2021. This policy is designed to stimulate the restaurant industry and provide breaks for other businesses.

Business Meal Deductions

The following meals are 100% deductible for tax years 2021 and 2022, up from 50% deductibility in 2020:

  • In-office meals provided during meetings or as a convenience (if prepared by a restaurant).
  • Meals during business travel or at a seminar or conference.
  • Meals included as taxable compensation to an employee or independent contractor.
  • Meals for office parties and team building events.
  • Client business meals if the taxpayer is present.

The following entertainment expenses are not tax-deductible in 2021 and 2022:

  • Sporting event tickets.
  • Club memberships and related expenses.
  • Transportation to or from a restaurant for client business meals.

Planning OppOrtunities

  • Businesses should maintain a separate expense category for employee social meals as these are 100% deductible.
  • If they do not already, business owners should maintain separate business and personal accounts to make it easier to identify and track business meal deductions.

Conclusion

For help maximizing your tax savings and planning opportunities, please contact your experienced Chugh CPAs, LLP professional.