US tax laws governing the deductibility of expenses related to meals are complex and have incurred multiple revisions in recent years. For 2026, most of the rules will remain the same as they were for 2025 with a few, albeit impactful changes. Understanding these updates and how they may affect your business is essential for effective planning and informed decision-making.
For amounts paid or incurred after December 31, 2025, IRC §274(o), enacted by the Tax Cuts and Jobs Act, disallows any deduction for the following expenses:
- Expenses associated with an employer operated eating facility and the food or beverages associated with that facility. This disallowance includes any de minimis amounts associated with such a facility. It is important to note that if employees are charged full price for the meals, the limitations under IRC §274(o) do not apply.
- Expenses for meals provided to an employee for the convenience of the employer under IRC §119, that are excluded from the employee’s income.
“Meals provided to the employees for the convenience of the employer” is defined as meals furnished to employees on the employer’s premises and the primary purpose of providing the meal is to benefit the employer. This includes meals provided for employees where the nature of the work being done requires employees to remain on premises during meal times (e.g., meals provided to employees during overtime worked so they can remain productive, meals during on-site training that occurs over the lunch period, or meals provided to keep the employee available for emergency calls during their meal period).
This definition does not include meals provided to promote the morale or goodwill of the employee, or to attract prospective employees. The deductibility of these meals continues to follow the standard rules and limitations previously in effect.
In addition, this limitation does not apply to meals provided to restaurant employees and workers on certain commercial vessels or oil and gas platforms. These expenses remain 100% deductible.
There remains uncertainty about whether the new limitations under IRC §274(o) apply to the costs employers incur for providing complimentary snacks or beverages in the workplace, unrelated to an employer operated eating facility. To date, no IRS guidance has been issued to clarify whether these expenses are subject to the new limitations. Based on the guidance that is currently available, our opinion is that these expenses do not fall within the scope of IRC §274(o). Therefore, unless and until further guidance is released, it is our position that these expenses continue to be deductible up to 50% of the costs.
To support the deductibility of meal expenses, businesses should maintain thorough and accurate documentation. Substantiation should include the receipt showing the date, restaurant name, and total cost, along with the names of the individuals present and the specific business purpose of the meal. Meal expenses should reflect all components of the cost, including the price of the meal, applicable taxes, and any tip.
Taxpayers should begin assessing now how the recent changes to mealexpense deductibility may affect their operations and recordkeeping in the year ahead. This includes reviewing existing meal policies and determining whether adjustments are needed.
Below is a chart summarizing the deductibility of meals starting in 2026:
Type of Expense | 2026 | Example |
| Business meals | 50% deductible | Restaurant meal with client, meals while traveling for work |
| Meals for the convenience of the employer (not included in employee compensation) | Nondeductible | Meals provided to employees during training, overtime, for employee to remain on-call, etc. |
| Drinks and snacks (not associated with an employer operated eating facility) | 50% deductible | Snack and coffee stations in the breakroom |
| Company-wide events | 100% deductible | Holiday party, team building events |
| Meals included in employee compensation | 100% deductible | Value of meal included in employee wages |
| Meals provided at an “employer operated eating facility” | Nondeductible | Meals provided at a reduced charge to employees at an on-premises cafeteria operated by the employer |