Under the new tax law, additional restrictions are being implemented for meals and entertainment deductions. Code Section 274(e) states that meals and entertainment expenses incurred or paid after December 31, 2017 will not be deductible with a few exceptions. Specifically, “expenses for recreation, social, or similar activities primarily for the benefit of the taxpayer’s employees, other than highly compensated employees” will still be allowed. Under these guidelines, office holiday parties, for example, are not limited. However, expenses for the convenience of employers will be limited to 50%. Taking this into consideration, the new tax law also states that meals and entertainment expenses for the convenience of employers will ultimately be nondeductible after 2025.
Below is a simplified graph to help you budget your meals and entertainment expenses for the 2018 tax year:
| Old Rules | New Rules | |
| Office Holiday Parties | 100% deductible | 100% deductible |
| Entertainment for Clients | 50% deductible | Nondeductible |
| Business Meals | 50% deductible | 50% deductible |
| Meals for Convenience of Employer | 100% deductible | 50% deductible (Nondeductible after 2025) |
| Meals for Office | 100% deductible | 50% deductible (Nondeductible after 2025) |
| Meals during Travel | 50% deductible | 50% deductible |
