Stimulus Bill Increases Deduction Amount for Most Business Meals

An often-used tax deduction for business meals was expanded by the most recent COVID-19 stimulus, passed in December and now effective in 2021.

As a result of the Tax Cuts and Jobs Act, passed in December 2017, the deduction for business meals that otherwise met the general requirements for deduction was limited to 50% of the cost of the meal.

The Taxpayer Certainty and Disaster Relief Act of 2020, enacted last month, makes business meals provided by restaurants in 2021 and 2022 fully deductible, allowing a 100% deduction for takeout and delivery meals provided by a restaurant (in addition to meals eaten on the restaurant’s premises). There is no requirement that the meal be consumed in the restaurant. However, other existing requirements for deductibility under the Internal Revenue Code continue to apply, including those applicable to food or beverages provided at an entertainment activity.

For additional questions or information about this tax law change, please contact a member of Gould & Ratner’s Tax Planning and Compliance Practice.