Meals and Entertainment: 2017 vs. 2018

The Tax Cuts and Jobs Act of 2017 significantly changed the deductibility of business meals and entertainment expenses. Business generally may deduct from gross income “the ordinary and necessary expenses of carrying on a trade or business”. This blog will examine the rules for common business meals and entertainment expenses in 2017 and 2018.

2017 Rules

  • Office holiday parties: 100% deductible.
  • Meals: Business meals are 50% deductible.
  • Entertaining clients: Event tickets at face value are 50% deductible and qualified charitable events are 100% deductible.
  • Meals provided for the convenience of the employer: meals that are excluded from the employee’s income are 100% deductible; whereas, meals included in the employee’s income are 50% deductible.

2018 Rules**

  • Office holiday parties: 100% deductible.
  • Meals: Business meals are 50% deductible.
  • Entertaining clients: There is no deduction for entertaining clients (including rounds of golf and club dues).
  • Meals provided for the convenience of the employer: 50% deductible until 2025 then it will be nondeductible

**Subject to interpretation from the Internal Revenue Service. Be sure to consult your tax professional for your specific situation before planning policy changes.