The business meal deduction has been around for a long time. However, businesses should be aware of significant changes that are scheduled to take effect after December 31, 2025, which affects the deductibility of certain meals. These include:
- Employer-provided meals become nondeductible: Starting January 1, 2026, meals provided to employees on the employer's premises for the employer's convenience will become 0% deductible.
- De minimis meals become nondeductible: The deduction for certain de minimis fringe benefits, like in-office snacks and coffee, can no longer be deducted.
- Exceptions to the rule: An exception to the 50% limitation remains for business meals that are:
- Provided on a fishing vessel or fish tender vessel; or
- At a facility for the processing of fish for commercial use or consumption that is:
- Located in the United States;
- North of the 50-degree north latitude line. (The location requirement for processing facilities limits the deduction to Alaska);
- Not located in a metropolitan statistical area.
More importantly, what stays the same under this change?
Certain meals and entertainment rules are not affected. They include:
- Still 50% deductible:
- Meals while traveling for business.
- Meals with clients or prospects (business purpose must be documented).
- Still 100% deductible:
- Company-wide social events (such as a holiday party).
- Meals provided to the public (for example, food served during a product launch).
The bottom line is that you may continue to provide food and coffee to your employers, but it comes out of your own pocket because you won't be able to deduct it.