So,you may have heard the buzz on the Meals & Entertainment changes. The biggest ding goes to entertainment and staff meals. Forget the nice catered lunches, you will probably be getting bagels.
Forget entertaining anyone by taking them to a sporting event, concert, or a musical. Because guess what, It isn’t deductible anymore.
What is even worse, tickets to charitable events are NO LONGER DEDUCTIBLE. So, other than having a passion for your favorite non-profit organization and going to their gala, you really don’t have an incentive to go as a small business.
Meals provided by the employer (for their convenience) to benefit their staff are now only 50% deductible, from 100% (that includes an on-site cafeteria and otherwise on the employer’s premises). After 2025, that is completely gone. Holiday parties are still 100% deductible.
If you currently track your expenses for both meals and entertainment in a combined general ledger account, you will want to consider setting up a new account in your system to track meals separately from entertainment expenses.
This hurts small businesses, because most of our marketing is relationship marketing. This is going to hurt the hospitality, tourism, non-profit and sporting industries. Everyone is going to be affected.
UPDATE: IT APPEARS THAT MEALS WITH CLIENTS, PROSPECTS, AND BUSINESS ASSOCIATES ARE STILL DEDUCTIBLE AT 50%, AS LONG AS THEY ARE NOT ‘EXTRAVAGANT’.
For a free download of PDF version of the tables showing exact deductions taken, I found a great site. Click Here.
For more information, contact Nesha Pai at firstname.lastname@example.org