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Temporary Full Deduction for Business Meals

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.


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