Business Meals in 2026: What Is Still Deductible

Meals are one of the most common business expenses, and one of the most often misclassified. The rules changed again on January 1, 2026, and some meal costs that were partly deductible last year are not deductible at all now.

Here is where the lines fall for 2026.

Client and business meals: still 50 percent

A meal with a client, customer, prospect, or other business contact is generally 50 percent deductible. The meal cannot be lavish, and you or an employee must be there. The same 50 percent rule applies to meals while you travel overnight for business.

Keep the receipt and note who attended and the business purpose. That short note is what supports the deduction if it is ever questioned.

Entertainment: still zero

Tickets to a game, a round of golf, or a concert with a client are not deductible, even when business is discussed. If food is bought separately at an entertainment event, or shown separately on the bill, the food can still fall under the 50 percent rule.

What changed in 2026

Starting January 1, 2026, two kinds of employer meal costs are no longer deductible at all:

• Meals provided to employees on the business premises for the employer's convenience, for example because staff need to stay on site and available during meal periods.

• The cost of running an employer-operated eating facility for employees, such as a company cafeteria, including the food and drinks served there.

Before 2026, these costs were 50 percent deductible. The 2025 federal tax law added narrow exceptions, including certain meals restaurants provide to their own employees and meals on certain fishing vessels and at fish processing facilities. Most businesses do not fit those exceptions.

What is still fully deductible

Some meal costs remain 100 percent deductible:

• Holiday parties, team celebrations, and company picnics held mainly for employees in general, not just for owners or top earners.

• Meals you include in an employee's taxable wages.

• Food and drinks made available to the general public, such as refreshments for customers in a showroom.

• Meals you sell to customers in the ordinary course of business.

Office snacks and team lunches

Coffee, water, and snacks in the office break room are generally still 50 percent deductible, as long as they are not part of an employer-operated eating facility. Lunch brought in for a working meeting on your premises is less clear. It may still be 50 percent deductible, but if it is provided so staff can keep working, it may be one of the meals that lost its deduction this year. The IRS has not yet issued guidance on this point, so we look at these case by case.

Set up the books to match

The easiest way to get this right is in your chart of accounts. Use separate accounts for client meals, travel meals, employee events, entertainment, and any on-site employee meals that are now nondeductible. When each charge lands in the right account during the year, the year-end tax adjustment takes minutes instead of hours.

A California note

California does not automatically follow federal tax changes, and it has not adopted the 2025 federal tax law. Its treatment of some meal and entertainment costs can differ from the federal rules, so we review these accounts separately for the California return.

Book your planning call

If you want us to review how your meal and entertainment costs are set up before year end, book a time with our team at calendly.com/kirkcole/15-minute-meeting.

This article is general information, not tax advice for your situation. Tax rules change, and the right move depends on your facts.