Meals & Entertainment under the new tax act–important changes (no, the sky is definitely not falling!)

Despite the hyperbole you may have heard, the sky is not falling!

Yes, there are some changes to the tax treatment of meals, entertainment, etc.  And you must still follow the same business purpose and substantiation tests.  Plus, changing your bookkeeping accounts to accommodate these changes back to January 1, 2018 will make it much easier for you at the end of the year when you go to prepare your taxes!

Entertaining Clients:

  • Meals: was 50% and still 50%
  • Entertainment (sporting, concert or other events: was 50% of face value of ticket) now non-deductible

Employee travel meals: was 50% and still 50%

Office Holiday parties: was 100% and still 100%

Meals provided for employer convenience located on employer’s facility:

  • Was: 100% deductible provided the meals are excluded from the employee’s gross income as de minimis fringe benefits; otherwise 50%
  • New: 50% deductible through 2025; non-deductible after 2025