IRS Guidance on 100% Deductibility of Meals

Guidance on 100% Deduction for Food and Beverages

The IRS released guidance on tax relief for deductions for food or beverages from restaurants. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 adds a temporary exception to the 50% limit on business meal deductions.

For 2021 and 2022, businesses to can deduct 100% of food or beverages purchased from restaurants. The business owner or employees must be present when the food or beverages are provided. Also, the expense cannot be lavish or extravagant under the circumstances.

The temporary provision defines restaurants as businesses that prepare and sell food or beverages to retail customers for immediate on-premises and/or off-premises consumption. However, restaurants do not include businesses primarily selling pre-packaged goods not for immediate consumption, such as grocery stores and convenience stores.

For more information see the IRS News Release IR 2021-79 and Notice 2021-25.