As of January 1, 2026, significant changes to the tax treatment of employer-provided meals are now in effect. As part of the phased-in provisions of the Tax Cuts and Jobs Act (TCJA) and new exceptions from the One Big Beautiful Bill Act (OBBBA), many previously deductible meal expenses are no longer eligible, impacting how businesses handle these costs.
If your organization provides meals to employees, whether at the office, during business travel, or in client-facing settings, these changes may directly influence your tax strategy and expense policies.
What’s No Longer Deductible
Previously, meals provided on-site for operational reasons were often deductible, especially when they supported employee availability during extended shifts or urgent work demands. That is no longer the case:
Starting in 2026, meals provided for the convenience of the employer or were considered “de minimis” fringe benefits are not deductible. This includes:
- Food offered on company premises for operational reasons
- Meals served or other food provided in breakrooms or through employer-operated kitchens
- Subsidized cafeterias, when the meals are not taxed as employee income
The IRS has significantly narrowed what qualifies for a deduction, eliminating many longstanding practices.
What Is Still 50% Deductible
Some meal expenses continue to qualify for 50 percent deductions, including:
- Business meals with clients or prospects, provided an employee is present and the meal is not part of an entertainment activity
- Meals incurred during business travel
However, these deductions require proper documentation. Businesses must record the purpose of the meal, the location, and the names and roles of those attending to substantiate the expense.
Fully Deductible Meals: Exceptions That Still Apply
There are still situations where 100 percent deductions are allowed. These include:
- Meals that are included as part of an employee’s taxable compensation
- Food served at company-wide events, such as staff parties or team-building outings
- Meals offered to the general public for marketing or promotional purposes
- Meals sold to customers as part of your regular operations
- Certain job-related meals in industries where providing food is considered a necessity
Whether these exceptions apply depends on how the meals are provided, reported, and documented.
Entertainment Expenses: Still Off-Limits
The ban on deducting entertainment expenses remains firmly in place. If meals are tied to an entertainment activity, such as a sporting event or concert, the food and drink must be separately itemized and documented to qualify for any deduction.
If the costs are bundled and not broken out clearly, the entire amount becomes nondeductible.
What Employers Should Do Now
With the new meal deduction rules in effect, it’s critical for businesses to take a more structured approach to managing meal-related expenses. Proper classification, documentation, and internal controls are essential for compliance and tax efficiency.
Here are key steps to consider:
- Review and update your meal and travel reimbursement policies
- Identify meal expenses that are no longer deductible
- Update your chart of accounts to distinguish between deductible and nondeductible meals
- Ensure expenses are backed by clear, consistent documentation
- Train employees responsible for expense submissions and approvals
- Reevaluate your broader approach to employee meals and related benefit
Taking these steps can reduce tax exposure, support compliance, and improve readiness for inquiries from tax jurisdictions.
How LGA Can Help
At LGA, we work closely with businesses to help them navigate evolving tax landscapes. Whether you are revising your internal policies or need help reclassifying expenses due to the 2026 meal deduction rules, we are here to help.
Our team can assist with:
- Evaluating your current meal and entertainment expense policies
- Enhancing your documentation and tracking systems
- Identifying areas of risk or opportunity in your expense reporting
If meal expenses are part of your operational routine, now is the time to ensure you are aligned with the new tax standards. Contact LGA today to start the conversation.
