The IRS has released guidance related to the temporary 100% deduction for business meals provided by a restaurant. The Consolidated Appropriations Act, 2021 temporarily increased the deduction from 50% to 100% for a business’s restaurant food and beverage expenses incurred through January 1, 2023. All other food and beverage expenses are still subject to the 50 percent deduction limitation unless some other exceptions applies.

The IRS guidance defines a “restaurant” as a business that prepares and sells food or beverages to retail customers for immediate consumption, regardless of whether the food or beverages are consumed on the businesses’ premises. A restaurant does not include businesses that primarily sell prepackaged food or beverages not for immediate consumption, including grocery stores, specialty food stores, liquor stores, convenience stores, vending machines, or kiosks.

*This chart does not cover every scenario or exception. It is provided to give a basic overview of expenses effected by The Consolidated Appropriations Act, 2021. You should speak with your CPA about any questions to understand how this act applies to your unique situation.

It will be important for your books to differentiate the type of meals into separate expense accounts so that it is clear how much is deductible.

We suggest setting up three meals expense accounts: 100% deductible, 50% deductible, and Non-deductible.

If your calendar year based tax return is on extension, the fall deadlines are quickly approaching! Be sure to get ALL your documents into us 30 days prior to the deadline to ensure timely filing of your return. You can send documents to us easily and securely through the ClientAxcess Portal.