Modification to Tax Deductions for Business Meals in 2021 and 2022
Pursuant to the COVID-19 Economic Relief Bill executed by former President Donald Trump on December 27, 2020, business owners are now permitted to deduct 100% of business meals for the 2021 and 2022 tax years to provide additional stimulation to the country’s restaurant industry. The expenses, which were previously only deductible by 50%, include the following:
- Meals provided for the convenience of the employer if the meals are provided by a restaurant.
- Meals included in charitable sports packages.
- Meals in office during meetings of employees, stockholders, agents, or directors if the meals are provided by a restaurant.
- Meals during business travel.
- Meals at a seminar or conference.
- Client business meals.
The following expenses have historically been and will continue to be 100% deductible:
- Meals included as taxable compensation to an employee or independent contractor.
- Meals sold to a client or customer.
- Food offered to the public for free.
- Office holiday party or picnic.
- Team-building events.
This increased percentage of allowable business meal deductions went into effect January 1, 2021 and will continue through December 31, 2022, so make certain you are tracking these expenses to be included when it comes time to file your 2021 and 2022 taxes.
More information about the provisions of the COVID-19 Economic Relief Bill can be found online at: https://www.ncsl.org/ncsl-in-dc/publications-and-resources/covid-19-economic-relief-bill-stimulus.aspx. If you have questions regarding your business or this newsletter, please contact MOBO Law, LLP.
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