Business Meals and Entertainment: What You Can Deduct

TLDR

Entertainment is generally no longer deductible: the ballgame, the concert, the golf round, even with a genuine client and a genuine business conversation. Business meals are generally 50% deductible when you or an employee is present, the expense is not lavish, and there is a real business purpose. When food is bought at an entertainment event, it can still qualify if it is separately stated on the invoice, which makes asking for a separate receipt a decision worth real money. Substantiate with amount, date, place, business purpose and who attended, and record it at the time.

A lot of what people still believe about this comes from before the rules changed. The old world of deducting client entertainment is gone, and continuing to claim it is a straightforward way to lose a deduction and some credibility at the same time.

Here is where it actually stands.

#Entertainment: generally gone

Activities generally considered entertainment, amusement or recreation are not deductible, regardless of how business-related the occasion was.

That covers sporting events, concerts, theatre, golf, hunting and fishing trips, nightclubs, and the facilities associated with them.

It does not matter that you discussed a real deal with a real client. The activity itself is not deductible. This is the single biggest change from the older rules, and the one people most often have not absorbed.

#Meals: generally 50%

A business meal is generally 50% deductible when:

You or an employee is present
The food or beverages are not lavish or extravagant in the circumstances
It is provided to a current or potential business contact: client, customer, consultant, supplier, employee
There is a genuine business purpose

That covers most of what small business owners actually spend: a meal with a client, a meal with a prospect, a working meal with your team.

#What still gets 100%

A few categories are treated more generously, and they are worth knowing because they are often miscategorized at 50%:

Meals provided to the general public for promotional purposes, such as an open house
Food included as taxable compensation to an employee
Meals sold to customers in the ordinary course of business, which is inventory rather than a meal deduction

Employer-provided meals and snacks for staff convenience are no longer deductible to the employer. The Tax Cuts and Jobs Act cut them to 50% and then eliminated the deduction entirely for amounts paid after December 31, 2025 (IRC §274(o)). The office kitchen, the catered team lunch, and meals furnished for the employer’s convenience are still tax-free to the employee, but the business gets no deduction for them in 2026.

#Substantiation: five things, recorded at the time

The deduction lives or dies here, and this is where correspondence audits land.

For every business meal you need:

Amount
Date
Place, the name and location of the establishment
Business purpose, what was discussed or the business benefit expected
Business relationship, who attended and how they relate to your business

The last two are what a receipt cannot supply. A credit card statement proves you spent money at a restaurant. It cannot show that the meal had a business purpose, and that is precisely what is being questioned.

The habit that solves it: write the names and the purpose on the receipt before you leave the table, or photograph the receipt and add a note in the same minute. Recorded later, it is a reconstruction. Recorded then, it is a record.

Common situations
	Situation	Typical treatment
Lunch with a client, business discussed	Meal	Generally 50%
Client's ticket to a game	Entertainment	Generally not deductible
Food at that game, separately stated	Meal	Generally 50%
Food at that game, bundled in the ticket price	Entertainment	Generally not deductible
Meal alone while travelling for business	Meal	Generally 50%
Meal alone locally, no business contact	Personal	Not deductible
Open house food for the general public	Promotional	Generally 100%

#The errors I see most

Still deducting entertainment. Usually not defiance, just advice that never got updated.

No attendee names. The most common substantiation failure by a wide margin.

Deducting solo meals. Eating lunch near your own office while thinking about work is not a business meal. Meals while travelling away from home on business are different.

Bundled event costs. Losing the food portion by never asking for it to be separated.

Treating everything as 50% or everything as 100%. The categories are genuinely different and lumping them costs you money in one direction and creates exposure in the other.

S-corp owners paying personally with no plan. If you are reimbursed by your corporation, that needs an accountable plan in place first, or the reimbursement can end up as taxable compensation.

#Why this attracts attention

Meals sit alongside vehicle expenses as classic correspondence audit territory: frequently claimed, easily overstated, often thinly documented, and impossible to reconstruct honestly after the fact.

The defence is identical in both cases. Not a clever argument, just a contemporaneous record. Either the note naming the client exists or it does not.

#The short version

Entertainment is generally out. Business meals are generally 50% when you are present, the cost is reasonable and there is a real business purpose. Food at an entertainment event survives only if separately stated, so ask for the separate receipt.

Write down who was there and why, at the table. That one habit protects more deduction value than any planning technique in this area.

If your books currently have a single “meals and entertainment” category with everything in it, that is worth splitting before year end, because the categories now carry genuinely different treatment.