Business Meals – Are They Deductible?

Business Meal Deductions for Tax Year 2026: What Business Owners Need to Know

Beginning January 1, 2026, the rules governing business meal deductions shift again—this time bringing one of the most significant changes in decades. While many of the familiar rules remain intact, new restrictions will eliminate deductions that employers have relied on for years, particularly those relating to employer-provided meals and workplace cafeterias.

The 50% Rule Still Applies to Most Business Meals

For 2026, the long-standing general rule remains unchanged: Most business meals are 50% deductible.

To qualify, meals must be ordinary and necessary, not lavish or extravagant, the taxpayer or employee must be present, and they must be provided to a business associate with proper documentation.

Meals During Entertainment Events

Entertainment expenses remain nondeductible. However, meals purchased separately or stated separately from entertainment remain 50% deductible.

Major Change for 2026: Employer-Provided Meals Not Deductible

Beginning in 2026, no deduction is allowed for meals provided for employer convenience, at employer-operated facilities, or as de minimis meals. This is a significant shift affecting workplaces that regularly provide food to employees.

Narrow Exceptions

Certain meals remain deductible:

• Meals sold to customers (restaurants, caterers)
• Meals for transportation and fishing industry workers

80% Deduction for Transportation Workers

• Transportation workers subject to DOT regulations—such as truck drivers, airline, and railroad employees—continue to receive an 80% deduction.

Practical Examples

Client lunch: 50% deductible

Late-night employee meals: 0% deductible

On-site cafeteria: 0% deductible

Truck driver meals: 80% deductible

Sports event meal with separate invoice: 50% deductible

How Businesses Should Prepare

1. Update the chart of accounts

2. Adjust employee policies

3. Require separate invoicing for entertainment meals

4. Train managers on documentation and deductibility rules

5. Prepare employees for loss of on-site meal perks

Summary

What stays the same:

• 50% deduction for most business meals
• 80% deduction for transportation workers
• Deductibility for separately stated entertainment meals
• 100% Employee appreciation events (company holiday parties and summer picnics)

What changes:

• Employer-provided meals become nondeductible
• On-site cafeteria expenses for employees are now nondeductible
• De minimis fringe meals become nondeductible

McGill, Power, Bell & Associates is here help you navigate these changes and plan accordingly. Contact one of our team members for personalized insight and next steps.