Business owners often have questions about what meal and entertainment expenses are deductible, especially as tax laws continue to evolve. Let’s break down the current rules around business meals, incidental meeting costs, and entertainment expenses so you can avoid surprises at tax time.

When Are Business Meals 100% Deductible?

Under most circumstances, business meals are only 50% deductible. However, there are a few exceptions where meals can be 100% deductible. These exceptions are narrow, but important:

Recreational, Social, or Entertainment Events for Employees

Meals and beverages provided at company events—such as holiday parties or summer picnics—are 100% deductible if they are primarily for the benefit of rank-and-file employees (not just owners or highly compensated staff).

Meals Provided to the Public

If your business offers free food or drinks to the general public—for example, coffee at a retail store or snacks at a promotional event—those expenses are fully deductible.

De Minimis Fringe Benefits

Meals may also be 100% deductible if they qualify as a de minimis fringe benefit under IRC §132(e). For this to apply, the food must be served at a facility on or near the business premises, and revenue from the facility must normally equal or exceed direct operating costs.

In other words, you need to be running a break room or in-house cafeteria that covers its own costs. If you’re simply providing snacks or casual meals in an employee lounge, these do not qualify for the 100% deduction and are typically subject to the 50% limit.

(Note: Prior to the 2018 Tax Cuts and Jobs Act (TCJA), meals provided for the employer’s convenience on business premises were 100% deductible. That rule no longer applies and is scheduled to fully phase out after 2025.)

Are Coffee and Donuts a Meal or a Meeting?

Many businesses wonder whether incidental food—like coffee, pastries, or pizza at a team meeting—can escape the 50% limitation. The IRS has not issued clear guidance on whether such minor expenses qualify as meeting costs rather than meals.

In practice, companies may treat these expenses as incidental and 100% deductible, especially when tied to internal meetings or morale-building activities. However, the tax code does not provide any safe harbor for doing so. Unless the meal meets one of the specific 100% deductible categories listed above, even minor food costs are subject to the 50% deduction limit.

If your business routinely provides food at meetings, make sure you’re documenting the purpose of the meeting, attendees, and how the food supports business activities.

This can help support the deduction in the event of an IRS inquiry—even if only 50% of the cost is ultimately allowed.

Entertainment Expenses: Not Deductible

Here’s where things are very clear: entertainment expenses are no longer deductible.

This includes things like tickets to concerts or sporting events, golf outings, nightclub expenses, and any other activity considered primarily entertainment in nature.

The TCJA eliminated deductions for entertainment, amusement, and recreation—even if there’s a clear business purpose.

As the IRS FAQ confirms, entertainment expenses are not deductible under current law, even if meals are served during the event. Only the meals themselves—if they are separately stated and meet specific criteria—may be partially deductible.

Here’s a quick breakdown to help clarify:

Final Thoughts

Understanding the distinction between meals, meetings, and entertainment is critical for maintaining compliant records and maximizing your business deductions. The rules may seem restrictive, but with proper planning and documentation, you can still take advantage of allowable deductions.

If you’re unsure about how to categorize a specific expense—or if you’re providing regular meals or perks to your team—it’s worth speaking with a qualified tax advisor to review your policies.