2022 Enhanced Business Meal DeductionJune 16, 2022
Here is a reminder for the 2022 enhanced business meal deduction. This is particularly important for small business accounting and tax planning.
For 2021 and 2022 only, businesses can generally deduct 100% of the cost of business-related food and beverages purchased from a restaurant. The deduction limit is usually 50% of the cost of the meal.
Qualifying for the enhanced deduction. To qualify for the enhanced business meal deduction:
- The business owner or an employee of the business must be present when food or beverages are provided.
- The food or beverages are provided to the business owner, their employee or a business associate.
- Meals must be from “restaurants,” which are defined as businesses that prepare and sell food or beverages to retail customers for immediate on- or off-premises consumption.
Note. Grocery stores, convenience stores and other businesses that mostly sell prepackaged goods not for immediate consumption aren’t restaurants for purposes of the business meal deduction. In addition, employer-sponsored eating facilities generally aren’t restaurants for purposes of the meal deduction, even if they are operated by a third party.
- Payment or billing for the food and beverages occurs after December 31, 2020, and before January 1, 2023.
- The expense cannot be lavish or extravagant.
What costs qualify for the business meals deduction? Eligible costs for purposes of the business meal deduction include the cost of the meal and beverages plus taxes and tips.
Note. The cost of transportation to and from the meal isn’t part of the cost of a business meal.
What about entertainment events? Generally, meals and beverages provided at entertainment events (i.e., concerts, football games) aren’t deductible business meals. However, business owners may be able to deduct the costs of meals and beverages provided during an entertainment event if:
- they purchase the food and beverages separately from the entertainment, or
- the cost of the food and beverages is separate from the cost of the entertainment on one or more bills, invoices, or receipts.
Businesses should review the special recordkeeping rules that apply to business meals.