Meals and Entertainment Expenses: New Year, New Tax Rules

Summary: The arrival of 2026 brings several changes to the tax treatment of business meals and entertainment expenses. These changes may directly impact your company’s deductions and taxable income, making it more important than ever to understand what remains deductible and what does not. Proactive tracking and proper classification of these expenses will be critical to preserving allowable deductions and avoiding costly surprises.

The tax treatment of business meals and entertainment expenses has changed significantly in recent years. Immediately following the Tax Cuts and Jobs Act of 2017 (TCJA), the deduction for most food and beverage business expenses were limited to 50%. Other provisions of the TCJA were delayed and only take effect beginning Jan. 1, 2026. Specifically, beginning in 2026, TCJA de minimis food and beverage expenses (under IRC § 132) served at an employer-operated eating facility and certain meals furnished for the convenience of an employer (under IRC § 119) are no longer deductible in any capacity.

To assist in determining the deductibility of these expenses, please consult KSM’s reference chart on the tax treatment of business meals and entertainment expenses.

If you have questions about these deductions, reach out to your KSM advisor or complete the form below.