Tax reform (Public Law 115-97) includes winners and losers.
Employers who for their convenience provided business meals for their employees are losers—50 percent losers to start and then total losers later.
Meal costs that were 100 percent deductible for perhaps a half century or more are now limited to 50 percent, and that 50 percent becomes a big fat zero deduction beginning January 1, 2026.
Employee meals that were 100 percent but are now 50 percent deductible beginning January 1, 2018, include
- meals served at required business meetings on your business premises;
- meals served at required business meetings in a hotel or other meeting place that passes the test for business premises but is located outside of the office;
- meals served to employees who are required to staff their positions during breakfast, lunch, and/or dinner times;
- meals served to employees at in-office cafeterias; and
- food and meal costs for employees who are required to live on premises for the convenience of the employer.
For 2018, you need an account in your chart of accounts that says something like “meals subject to 50 percent cut.” In this category, you can put travel meals and the meals above.
In spite of the reduction to 50 percent, you are likely to continue your business activities that include the meals. If you have questions about this new 50 percent rule or strategies to implement it, please call us at 714-896-0366.
