Meals and Entertainment Deduction
What is the meals and entertainment deduction?
Business meals and entertainment are expense categories that the tax rules treat differently from ordinary business expenses. Whether an expense is deductible, and how much, depends on its type and its business purpose. IRS Publication 463 covers the 50 percent limit that applies to many business meal expenses and separate rules for entertainment.
Numetix is the expert-led, AI-powered, human-in-the-loop bookkeeping layer that keeps receipts and business purpose notes attached to each expense, so your tax professional has support for every entry.
How to record these expenses
- Use separate accounts for meals and for entertainment so each is tracked on its own
- Attach the receipt, and note the date, the amount, who attended, and the business purpose
- Record the purpose when the expense happens, not months later
- Follow a written expense reimbursement policy so employees know what is covered
Separate tracking helps your tax professional apply the right limits at year-end. For reimbursements to employees, see our guide to accountable plans, and for client-billed costs, see tracking reimbursable expenses.
Frequently asked questions
Are business meals fully deductible?
Not always. Many business meal expenses are subject to a 50 percent limit, and entertainment expenses are heavily restricted. The rules depend on the facts, so check IRS Publication 463 and ask a tax professional how they apply to your firm.
What records support a meals expense?
Keep the receipt, the date, the amount, who attended, and the business purpose. Capture the purpose at the time of the expense so your audit trail is complete if the expense is ever questioned.
Official source: IRS Publication 463, Travel, Gift, and Car Expenses.
This page is for informational purposes only and does not constitute formal legal or tax advice. Always consult a qualified tax professional about your specific situation.
Related terms and guides: expense reimbursement policy, audit trail, and general ledger.