The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, made changes to the allowable business meals deduction. Beginning in 2026, business expense deductions are disallowed for employer-provided meals that are excludable from an employee’s income or are de minimis fringe benefits unless certain exceptions are met.
Background
In 2017, the Tax Cuts and Jobs Act (TCJA) disallowed the deduction for expenses related to activities generally considered to be entertainment, amusement or recreation, that were incurred in years beginning after December 31, 2017. However, in most cases, taxpayers were able to continue to deduct 50% of food and beverage expenses associated with their trade or business.
Under the TCJA, the deduction was permitted if: (1) the expenses are ordinary and necessary; (2) the expenses are not lavish or extravagant; (3) the taxpayer, or an employee of the taxpayer, is present when food or beverages are provided; (4) food or beverages are provided to a current or potential business customer, client, consultant or similar business contact; and (5) food or beverages are purchased separately from entertainment (or stated separately on one or more bills, invoices or receipts).
Deductibility Under the OBBBA
Expenses that will be non-deductible starting in 2026 include meals provided to employees on business premises for employee convenience, including cafeteria lunches, catered meeting meals, or incentivized meals for employees’ on-site for operational reasons such as working late for business demands.
A de minimis fringe benefit is an expense that is typically so small that it makes accounting for the expsense unreasonable or impractical. Under the OBBBA, the meals and snacks that were once considered a de minimis fringe benefit are no longer 50% deductible. These expenses may include items such as coffee, snacks, or other refreshments provided in a breakroom as part of the normal course of business.
A few exceptions apply to the OBBBA deductibility rules. Expenses that can still be deducted include meals that restaurants provide to employees as part of normal business operations and Alaskan fishing industry meals.
Although this change from 50% to 0% deductibility seems minimal, it is important for taxpayers to understand how these costs can add up over periods of time. Taxpayers should ensure that amounts deducted in 2026 and forward meet the criteria set forth above, and maintain accurate records in case the returns are challenged by the Internal Revenue Service. The other TJCA provisions regarding the deductibility of business meals remain unchanged under the OBBBA.
Please contact the GYF tax professionals at 412-338-9300 with any questions or comments.
