On April 8, 2021, the Treasury Department and the Internal Revenue Service issued Notice 2021-25, which provides guidance on the temporary exception to the deductibility of business meal expenses in the Taxpayer Certainty and Disaster Relief Act of 2020.
Beginning January 1, 2021, through December 31, 2022, businesses can claim 100% of their food or beverage expenses paid to restaurants as long as the business owner (or an employee of the company) is present when the food or beverages are provided. Prior to the temporary exception, business meals were only 50% deductible.
- The business meal expense can not be lavish or extravagant.
- The notice defines a restaurant as "a business that prepares and sells food or beverages to retail customers for immediate consumption, regardless of whether the food or beverages are consumed on the business’s premises." Pre-packaged food or beverages which are purchased for later consumption would be limited to 50% deductibility (e.g., purchases from a grocery store).
We recommend documenting your business meal to support it was a business meeting.