Meals, travel and entertainment: what is deductible

What is deductible, and how much?

When is a meal deductible?

When it is not lavish, the taxpayer or an employee is present, and it is with a current or prospective customer, client, supplier, adviser or similar business contact. A meal bought during an entertainment event is 50% deductible only if bought separately or stated separately on the bill. A solo lunch on an ordinary working day is personal, not a business meal.

What counts as business travel?

Travel away from your tax home, overnight or long enough to need sleep or rest, mainly for business. Costs of getting there and back, lodging, local transport, and 50% of meals are deductible. If a trip mixes business and holiday, travel to and from is deductible only if the trip is mainly for business, and holiday days are not. Different allocation rules apply to longer trips abroad. Commuting between home and a regular workplace is never deductible. See vehicle expenses.

Bringing a spouse or friend on a business trip does not make their costs deductible unless they are an employee travelling for a real business purpose.

What about meals with your own staff?

A meal with employees where business is discussed is 50% deductible, like a client meal. Company-wide events such as a holiday party or summer picnic, open to all employees, are 100% deductible. Snacks and meals provided at the office for the employer's convenience are no longer deductible from 2026, after the 2017 law's phase-out.

Are conference meals deductible?

Meals included in a conference registration fee are generally treated as part of the conference cost, but if the meal portion is stated separately, it is subject to the 50% limit. Meals you buy yourself while attending a conference away from home are business travel meals at 50%.

What does an example look like?

A consultant flies to a client in another city for two nights. The flight is $450, the hotel $380, taxis $60, and meals $180, including a $90 dinner with the client. The deductible amount is $450 plus $380 plus $60, which is $890, plus 50% of $180, which is $90, for a total of $980. A $150 basketball ticket with the client the same evening is not deductible.

What records do you need?

1. Amount

   A receipt showing what was paid.

2. Date and place

   Where and when the meal or trip took place.

3. Who was there

   Names and business relationship of the people at a meal.

4. Business purpose

   What was discussed or the reason for the trip.

Most of this can be noted on the receipt or in your accounting software when the expense is recorded. See how to categorize business expenses.

See IRS receipt requirements for the $75 rule and digital copies.

Can you use per diem rates?

For travel meals, self-employed people can use the federal per diem rates for meals and incidental expenses instead of actual costs, still at 50%. Lodging must be actual cost for the self-employed. Employers can reimburse employees at per diem rates under an accountable plan.

Per diem rates are set by the General Services Administration for each US location, and by the State Department for foreign locations. Using them saves keeping every meal receipt, but you still need records of the time, place and business purpose of each trip.

How should they be recorded?

Keep meals, travel, entertainment and gifts in separate accounts, so the right percentage is applied at year end. Entertainment can be recorded but is added back for tax. See deductible business expenses.

This guide is general information. It is not tax or legal advice for your situation.