Clarification to changes of deductibility of business meals

by C. Robert Holcomb, EA, Extension Educator

In earlier summaries of the Consolidated Appropriations Act, 2021 (CAC), it was incorrectly reported that all business meal expenses would now be 100% deductible beginning in calendar year 2021.  That was incorrect.  The 100% deductibility for meals is attributable only to meals provided by a restaurant.  This change is temporary for amounts paid or incurred after December 31, 2020, and before January 1, 2023. 

The Tax Cuts and Jobs Act limited the deductibility of business meals. In 2020, the IRS issued both proposed and final regulations addressing the deductibility of business meals. As part of this guidance, in most cases, business meals were limited to 50 percent deductibility until 2025, when the business meal deduction will go away.

CLARIFICATION (Dec. 27, 2020)  Under the CAC, the new legislation provides that the exceptions to the 50% limit will only affect expenses for food or beverage provided by a restaurant that are paid or incurred after December 31, 2020, and before January 1, 2023.

The author expects additional guidance from the IRS sometime in the calendar year 2021.