Did you know the IRS generally cut entertainment deductions with the TCJA? With 2025 rules more complex than ever, are you sure you're maximizing your business meal and entertainment deductions?
This article unpacks IRS requirements and strategies to help you understand what’s deductible, what’s not, and how to save the most on taxes. Perfect for business owners and tax filers alike—read on to learn how to make the most of these deductions in 2025.
What is the Meals and Entertainment Deduction for 2025?
The Meals and Entertainment Deduction helps business owners save on taxes by allowing certain meal and entertainment expenses to be tax deductible. However, the 2018 Tax Cuts and Jobs Act (TCJA) placed restrictions on these deductions, especially around entertainment.
According to the IRS, most entertainment expenses aren’t deductible, even if they relate to business meetings. But don’t worry—many meal expenses tied to work, such as meals during business travel or client lunches, remain partially deductible. Understanding the IRS rules, including updates from the Consolidated Appropriations Act, is crucial for maximizing deductions on your tax return.
2025 Meals and Entertainment Deduction Summary
Under the Consolidated Appropriations Act, meals purchased from restaurants were 100% deductible in 2021 and 2022. Starting in 2023, the rules reverted to the Tax Cuts and Jobs Act standards, which reduced meal deductibility. As of 2024, restaurant meals are no longer fully deductible.
Deduction Breakdown:
0% Deductible
- Entertainment expenses (e.g., concert tickets, golf games).
50% Deductible
- Business meals with clients (non-lavish, work discussed).
- Office snacks and meals.
- Meals at conferences (beyond ticket price).
- Employee meals while traveling.
- Food for board meetings.
- Meals for employees working late.
100% Deductible
- Company-wide parties.
- Food/drinks provided free to the public.
- Meals included as taxable employee compensation (on W-2).
What Meals and Entertainment Expenses are Deductible in 2025?
What Types of Meals Can You Deduct as a Business Expense?
In 2025, the IRS permits deductions on business meal expenses, like meals with clients, employees, or business associates, where business purposes are discussed. You can also deduct 50% of meals during business travel, business meetings, or when meals are provided to employees working late.
But, a meal must have a specific business purpose to qualify. Meals purchased as part of company-wide events, like holiday parties, may be fully deductible, offering a valuable tax-saving opportunity for business owners who keep receipts for all qualifying deductible meals.
Can You Deduct Entertainment Expenses Like Concert Tickets or Golf Outings?
Entertainment expenses, including concert tickets, sporting events, and entertainment facility costs, generally aren’t deductible. The Tax Cuts and Jobs Act eliminated most entertainment deductions, meaning you cannot deduct the costs of entertaining clients at events—even if you discuss business.
There are limited exceptions: you may deduct the costs when entertainment is part of taxable compensation for employees, but the IRS does not consider client entertainment, country club memberships, or social events with clients deductible, even if they improve business relationships.
Further Reading: Learn what meal and entertainment expenses are tax deductible
How Much of Each Expense is Deductible?
Are Business Meals Still 50% Deductible in 2025?
Yes, business meal deductions remain 50% deductible when meals and beverages are provided to clients, employees, or potential business partners and discussions focus on business purposes. You can deduct the cost of meals purchased from a restaurant as long as business meetings were part of the agenda.
However, meals must not be overly lavish to qualify for this tax deductible amount, and receipts showing the date of the meal, location, business purpose, and names of those present at the meal should be kept for documentation.
What Exceptions Allow for 100% Deductibility?
Some expenses are fully deductible, such as meals provided at company-wide events, meals served at events open to the public, and meals included as part of employee compensation.
These types of deductible meals qualify under IRS rules because they benefit the entire team or are part of the employee’s overall taxable income. Plus, as a temporary tax benefit during COVID-19, meals purchased from restaurants were 100% deductible for a short period, though this does not extend into 2025.
Further Reading: Explore how to simplify business travel expense reimbursements
What Does the IRS Require for a Meal to Be Deductible?
What Are the IRS Guidelines on Business Purpose and Documentation?
For meals to be tax deductible, the IRS requires a clear business purpose, meaning that the expense must be necessary to conduct business and documented. Receipts should include details like the date of the meal, names of those present, purpose of the meal, and amounts spent, including tax and tip. The IRS does not require overly detailed documentation but does expect a record of the cost, attendees, and context to substantiate the deduction.
Can You Deduct Meals with Colleagues or Employees?
Yes, you can deduct meals with employees if the meal has a business purpose. Meals related to business travel, late work hours, or business meetings or conventions may qualify for a 50% deduction, as long as they’re work-related. But, if meals are unrelated to specific business needs or goals, they won’t qualify as deductible business expenses, so reserve these deductions for meals where business is genuinely discussed.
What Entertainment Expenses are Nondeductible?
Is Client Entertainment Ever Deductible?
Client entertainment isn’t deductible. This includes sporting events, concerts, or similar entertainment events tied to client outings. Even if you discuss business during the event, the IRS doesn't allow a deduction. However, entertainment tax deductions may be possible if the entertainment is part of compensation or included as part of the employee’s taxable benefits, helping certain costs to qualify as deductible business expenses.
How Does the IRS View Entertainment Provided as Part of Compensation?
If you provide entertainment as compensation, such as event tickets recorded in employee W-2s, the cost may be deductible. These expenses are seen as employee perks, helping retain or reward staff, and can be included as part of tax-deductible benefits on your tax return. This strategy allows certain entertainment and meal expenses to qualify, especially when they are a recognized part of the employee’s taxable compensation.
How Should Business Owners Document Meals and Entertainment?
What Details Should You Record to Stay IRS-Compliant?
Staying IRS compliant requires detailed records. Keep receipts for all meals and entertainment tax deductions, showing the cost, date, and purpose of the meal.
Always note the business purpose and those involved in the meal or entertainment. Clear and accurate records are vital for IRS tax compliance and allow you to back up each deductible expense should the IRS audit your business’s tax payments.
Are Digital Tools Helpful for Tracking Deductible Expenses?
Yes, digital tools streamline record-keeping. Software like QuickBooks and Expensify simplifies tracking deductible expenses, categorizing expenses as fully deductible or 50% deductible, and storing digital copies of receipts. These tools make it easier for business owners to categorize expenses accurately and stay IRS-compliant without manually sifting through physical receipts.
How to Report Meal and Entertainment Deductions on Your Tax Return
How Are Meal Deductions Claimed for Self-Employed Versus Corporate Entities?
If you’re self-employed, report business meal deductions on Schedule C. For corporations, these meals and entertainment expenses are filed with other business expenses on Form 1120. The deduction method varies depending on business structure, so tracking correctly throughout the fiscal year is essential to reduce errors and maximize deductions.
What Are Common Mistakes to Avoid on Tax Forms?
Avoid common mistakes like incorrectly categorizing nondeductible entertainment expenses as meals, mislabeling the deductibility of meals, or failing to include proper documentation. Incorrect claims can trigger IRS scrutiny and reduce tax savings. Always consult with a tax advisor if unsure, and remember to separate 50% and fully deductible expenses accurately to keep your business compliant.
Best Practices for Maximizing Deductions on Meals and Entertainment
Are There Fully Deductible Meal Options for Businesses in 2025?
Yes, 2025 tax rules still allow full deductions for certain meals—a valuable way to reduce your tax. For example, you can deduct 100% of meals at company-wide events, like holiday parties or retreats for professional associations.
This deduction also applies to meals provided free at public promotional events, which adds to the value of the meal deduction. Ensure each event is genuinely part of your business, with specific business goals tied to them. Remember, documentation matters: label receipts and keep details on the actual expenses to maintain IRS compliance.
Which Meal-Related Perks for Employees Are 100% Deductible?
Meals provided as a benefit to all employees—like office snacks, team-building lunches, or meals during overtime work—qualify as 100% deductible, maximizing your business meal deduction. For instance, if you bring in food to support employees working late, that cost is fully deductible as long as it’s deductible if purchased for this specific business reason.
You can even deduct the costs of renting event space for a company holiday party or similar event, but avoid anything too extravagant. Deductions like these let you reward employees while keeping cost of business meals in check.
How Can Bookkeeping Help You Maximize Tax Deductions?
What Are Some Useful Accounting Practices for Categorizing Expenses?
For each deductible business meal, categorize expenses by type: 100% deductible, 50% deductible (like meals during traveling for business), and nondeductible. Proper categorization helps you track expenses incurred and ensures compliance with US tax requirements.
Separate meals and entertainment by purpose—whether it’s a guide to entertainment or meals provided during travel for work. This lets you take full advantage of the value of the meal deduction and makes tax filing smoother.
Should Business Owners Work with a Bookkeeper or Tax Advisor?
Working with a tax advisor ensures you maximize deductions while navigating tax rules. A bookkeeper helps organize receipts and track expenses, keeping you ready to file and maximizing deductions.
For business owners, a tax expert can also offer tax advice on special deductions, like the per diem method for meals while traveling for business. Hiring a pro ensures you don’t miss deductions you may be able to deduct, which is crucial for staying efficient and tax-compliant.
How Can Taxfyle Streamline Meal and Entertainment Deductions in 2025?
Does Taxfyle Make Tracking Deductions Easier?
Yes! Taxfyle simplifies tracking for 2025 meals and entertainment by letting you upload receipts and categorize expenses, including those for business travel. This guide will help make deduction tracking seamless and accurate.
Can Taxfyle Help You Maximize Tax Savings?
Absolutely. Taxfyle’s tax advice and customized guidance help you avoid mistakes. Their platform helps you deduct business meals and other actual expenses effectively, maximizing your tax return's savings.
Key Takeaways
- Maximize Deductibles: Know which 2025 meals and entertainment expenses are fully or partially deductible, like company events (100%) and client meals (50%).
- Organize Receipts: Categorize meal and entertainment expenses carefully with dates, attendees, and purposes for easy tax compliance and IRS audits.
- Use Tax Tools or Pros: Tools like Taxfyle or a trusted tax advisor can streamline tracking, ensuring you claim every possible deduction accurately.
How can Taxfyle help?
Finding an accountant to file taxes is a big decision. Luckily, you don't have to handle the search on your own.
At Taxfyle, we connect you with licensed, experienced CPAs or EAs in the US. We handle the hard part of finding the right tax professional by matching you with a Pro who has the right experience to meet your unique needs and will file your file taxes for you.
