PHB Explains the 100% Deduction for Business Meals


The Consolidated Appropriations Act-2021 signed into law on Dec. 27, 2020, creates a temporary 100% deduction for business meals provided by a restaurant. The 100% deduction can include food, beverages, taxes, and tips. It also covers delivered or carryout meals. The purpose of this provision in the Act is to spur businesses to buy meals in order to help the restaurant industry.

You can claim the deduction from January 1, 2021 through December 31, 2022, when it will expire. This is a welcome tax deduction for businesses that have typically only been able to deduct 50% of meals.

What Qualifies for a 100% Deduction for Business Meals?

100% deductible business mealsThe criteria for whether a meal is a deductible business expense still apply. These include:

  • The taxpayer must be present at the meal.
  • The meal must be provided to someone you would normally do business with.
    (E.g., employees, prospective or current customers or supplier, etc.)
  • “Business” must be conducted during the meal.
  • The expense must be ordinary and necessary.
  • Expenses must not be lavish or extravagant. (This criterion is based on the facts and circumstances not a dollar amount.)

Tracking Your Expenses Correctly

As you take advantage of this deduction, it will be important to keep track of your expenses correctly. You should separate meals from any entertainment costs. Entertainment costs are still non-deductible during this time period.

Our Experienced Accountants Provide the Business Tax Services You Need

Whether it’s federal or state, the tax laws are always changing. Our experienced business tax professionals stay on top of all the changes to keep our clients in compliance and maximize deductions. PHB CPAs is one of the most experienced accounting firms in Franklin, TN.

We provide a full range of business tax services, planning, and preparation for a variety of businesses in Franklin and Greater Nashville. Give us a call today at 615-750-5537.

As one of the top CPA Firms in Nashville we offer accounting services to individuals, businesses, and non-profits in Nashville, Franklin, Brentwood, Spring Hill, Murfreesboro and throughout cities in Middle Tennessee.