Business Meals, Travel, and Entertainment: What’s Tax Deductible?
Published on by Kate Burkhart in Tax Services
- Business meals are generally 50% deductible when they meet IRS requirements, with new restrictions on employer-provided meals beginning in 2026.
- Entertainment expenses are generally not deductible, although certain exceptions apply.
- Business travel expenses may be deductible, including transportation, lodging, meals, and vehicle expenses.
- Accurate documentation is essential for supporting deductions and meeting IRS requirements.
Business lunches, client meetings, and work trips can all come with expenses, but which ones can actually be deducted? The rules vary depending on the type of expense, its business purpose, and how it’s documented.
Here’s a breakdown of what businesses should know about deducting meals, entertainment, and travel expenses.
When are business meals tax deductible?
Generally, 50% of business meal expenses can be deducted if they meet certain criteria. Meals must be ordinary and necessary, and they cannot be lavish or extravagant under the circumstances. For example, if fine dining is customary in a taxpayer’s profession, a meal at an upscale restaurant may not be considered extravagant.
The taxpayer or an employee must be present at the meal, and the meal must be for the taxpayer or a business associate, such as a customer, client, or consultant.
Beginning in 2026, IRC §274(o) eliminates the deduction for meals employers provide for their own convenience and for the cost of employer-operated eating facilities, such as on-site cafeterias. Certain exceptions apply, including meals provided to crews on commercial vessels and oil rigs.
What about entertainment expenses?
Entertainment expenses include costs related to entertainment, amusement, and recreation, such as sporting events, concerts, and theater performances.
Generally, entertainment expenses aren’t deductible. However, certain exceptions apply:
- Social and recreational events for the employees of the taxpayer
- Meetings for employees, stockholders, agents, or directors
If an event includes both entertainment and meals, the meal expenses may still be 50% deductible if they’re billed separately or itemized on the bill and reflect the venue’s usual price or a reasonable value.
Which business travel expenses can you deduct?
Certain business-related travel expenses are deductible, including travel between workplaces, client visits, and business meetings. However, commuting expenses, such as traveling from home to a primary workplace, aren’t deductible.
Taxpayers have two options for deducting vehicle expenses:
- Standard mileage rate: Multiply the annual IRS mileage rate by the number of business miles driven. Taxpayers may also deduct certain vehicle loan interest, personal property taxes, and business-related parking fees and tolls.
- Actual costs: Track vehicle expenses directly related to business travel and calculate the deductible amount based on business use.
What expenses count on a business trip?
Business trips can involve more than transportation and lodging. Deductible expenses may include:
- Transportation
- Baggage and shipping costs
- Lodging and meals
- Dry cleaning and laundry
- Business calls and other communication costs
- Conference fees
- Tips
- Other ordinary and necessary expenses
Transportation costs include airfare, train tickets, rental cars, rideshares, and taxis.
Lodging expenses may be deductible when a business trip requires an overnight stay or is long enough to require rest. This includes hotels and short-term rentals, but only the business-related portion of the trip qualifies.
For meals during business trips, taxpayers can deduct actual meal costs or use a standard meal allowance based on the destination. These meal expenses are generally 50% deductible.
Don’t forget the documentation
Keeping accurate records is an important part of claiming deductions for business meals and travel. Helpful documentation includes:
- Total miles and business miles driven
- Receipts for meals
- Business purpose of each meal
- Business relationship of the people involved
- Dates of trips
- Locations of travel
Organized records can make it easier to determine which expenses qualify and support deductions when it’s time to file.
What’s next?
Business expense deductions can add up, but understanding what qualifies and keeping the right documentation makes a difference. Our tax pros help businesses navigate deduction rules, identify potential tax-saving opportunities, and stay on top of changing requirements.
Have questions about which expenses your business can deduct? We’re here to help you make sense of it all – contact us today for a free consultation.
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