Changes to 2021 & 2022 Tax Deductions for Business Meals

Earlier this year, the Consolidated Appropriations Act (CAA) 2021 introduced a temporary 100% deduction for expensing business meals purchased from qualifying restaurants after Dec. 31, 2020, and before Jan. 1, 2023.

Under prior law, the deduction for business meals was limited to 50% of the cost. However, for 2021 and 2022, the deduction is doubled to 100% for the cost for meals provided by restaurants. Under Notice 2021-25, the IRS defines qualifying restaurants as businesses that prepare and serve food and drinks for immediate consumption, whether on or off-premises. This temporary 100% deduction was designed to help restaurants, many of which have been hard-hit by the COVID-19 pandemic.

Certain meal expenses continue to be only 50% deductible, including food and beverages not for immediate consumption, meals provided at eating facilities located on the employer’s business premises and meals provided at employer-operated eating facilities which are treated as a de minimis fringe.

Sincerely,

Maryna Varabyova, CPA

(877) 677-3737

vm.acc4u@gmail.com