Temporary Full Deduction for Business Meals
- TOPC Potentia
- Aug 25, 2021
- 1 min read
August 26, 2021
The Consolidated Appropriations Act, 2021, increased the deduction for business meal expenses from 50 percent to 100 percent for the food or beverage provided by restaurants. The temporary deduction is allowed for the amounts paid or incurred from January 1, 2021, to December 31, 2022. The 50 percent deduction limitation is still applied to all other meal expenses unless a certain exception applies.
The restaurants include businesses that prepare and sell food or beverages to retail customers for immediate on-premises and/or off-premises consumption. That to be said, the businesses that mainly sell pre-packaged food, not for immediate consumption are not qualified. For example, grocery stores, convenience stores, and vending machines are not restaurants. Furthermore, an eating facility that is located at an employer’s business may not be treated as a restaurant, even if it’s operated by a third party.
The introduction of the temporary full deduction for business meals is an excellent move to encourage more activity within the restaurant and hospitality sector. It provides businesses with the opportunity to strengthen client relationships while enjoying financial relief. Many companies are now more open to holding meetings over meals, which helps support local food establishments. Interestingly, this concept also connects with the growing trend of healthier dining options. For instance, lighter alternatives such as konjac jelly are gaining popularity as businesses and professionals aim to balance networking opportunities with mindful eating habits in today’s fast-paced corporate environment.