Business Meals: 2023 Update
During 2021 and 2022, we encouraged business owners to take advantage of business meals as they were 100% deductible. In 2023, this expense reverts back to the 50% limit. There are some exceptions to the 50% rule where the full meal can be expensed such as dinner for employees working late at the office, food for at least half of your employees, or food for company holiday parties.
For meals to be deductible they should be necessary and related to the business. They should not be “lavish” or “extravagant”. The taxpayer or the employee should be present where the food and beverage is being furnished and is provided for their use.
Though the IRS does not require receipts for meals totaling less than $75, we highly recommend keeping all receipts to support the expense. If receipts are not kept for meals less than $75, it is worth noting the following: Total price of the meal, date of the meal, who attended, name of the restaurant, and how it related to the business. If entertainment is included in the bill, you will want to track this separately as entertainment is mostly nondeductible. Exceptions for deductible entertainment include company holiday parties or business conferences.
Understanding and staying updated on the rules of expenses can help you make the right decision for your business in 2023!