Business Meal Deduction

What is the business meal deduction?

The business meal deduction allows businesses to deduct 50% of meal costs when the meal has a clear business purpose. Meals must not be lavish, and you must have a substantial business discussion during, directly before, or directly after the meal. Both meals with clients and employee meals during business travel qualify under this rule.

Substantiation requirements

Document the amount, date, place, and business purpose: record who attended and their business relationship to you. For meals over $75, keep the receipt. Note what business was discussed. Generic entries like 'client lunch' invite challenge. Specific entries like 'Met with Marcus Chen to discuss Q3 engagement scope' demonstrate legitimate business purpose.

Meal expenses that do not qualify

Primarily personal meals, even if business is mentioned in passing, do not qualify. Meals during entertainment events may have limitations. Employee meals at the office without a clear business purpose beyond convenience are generally not deductible. When in doubt, document thoroughly or assume the expense will not be deductible and be pleasantly surprised if it is.