Changes in Meal and Entertainment Business Expense Deductions

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Tax Legislation Update

Prepared by Josh Colsson, CPA– Tax Manager

Prior to recent Tax Cuts and Job Act, taxpayers generally could deduct 50% of expenses for meals and entertainment related to business purposes.

Meals provided to the company’s employees while on the business premises, for the convenience of the employer, were previously 100% deductible by the employer and did not require the employee to claim any additional income.

Various other employer-provided fringe benefits were also deductible by the employer and tax-free to the recipient employee.

Under the new law signed in December 2017, for amounts paid or incurred after December 31st, 2017, deductions for business-related entertainment expenses are disallowed.

Meal expenses incurred while away on business related trips are still 50% deductible. A new change is related to meals provided to employees while on the business premises are now only 50% deductible. This includes a cafeteria that is on the company’s premises. This deduction will remain 50% deductible under 2025 when it becomes non-deductible.

If you have any questions, please contact your HAC Tax Advisor.

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