The OBBBA made changes to the allowed Meals & Entertainment deductions allowed. Below are the updated regulations.
- A. Entertainment costs are non-deductible with a few exceptions e.g. tickets to sports games, golf outings, theater shows, etc. This includes client entertainment as well as dues for social clubs, golf clubs, and similar organizations.
- B. 100% Non-Deductible — Food and beverage expenses provided for the convenience of the employer e.g. overtime meals, free snacks, coffee, or onsite lunches provided even if during an employee business meeting, etc.
- C. 50% Deductible — Meals with clients or business associates as long as an employee of the business is present, the meal is not lavish in nature, and the expense is ordinary and necessary for carrying on business. Also, meals for travel away from home overnight for business are 50% deductible. If the expense includes food/beverage as well as entertainment the food/beverage portion must be indicated separately from the entertainment. Otherwise, the entire expense is 100% non-deductible.
- D. 100% Deductible — Company-wide events (holiday parties, picnics, outings) if primarily for non-highly compensated employees. Entertainment for these company-wide events is also 100% deductible.
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