Business meals deduction: What's deductible in 2026

What changed for business meals in 2026 after OBBBA?

The One Big Beautiful Bill Act (OBBBA) changed the rules for business meals for 2026 by making meals provided by employers on-site non-deductible. In other words, as of January 1, 2026, if you provide your employees with snacks, coffee, overtime meals, or even a full cafeteria at your workplace for their convenience, you can no longer deduct the expenses from your income. Previously, you could deduct 50% of the cost of providing on-site meals for your employees.

Which business meals are 50% deductible?

While employer-provided on-site meals are no longer deductible for 2026, many types of business meals are still 50% deductible.

• Client or prospect meals: Meals with a client or prospect, provided they are not bundled with any kind of entertainment. Make sure to keep entertainment costs separate.
• Business travel meals: Meals while traveling for business away from your home overnight.
• Business meeting meals: Meals you provide during conventions, business luncheons, trade shows, and other meetings. Take note that these include meals for internal meetings with employees, directors, agents, or stockholders.
• Employee-expensed meals: Meals that you reimburse for your employees.

Real example: Taking a client to dinner

Let’s say you take a client out to dinner to discuss an upcoming project. The meal costs $180, including tax and tip. Because the meal was with a client and for a specific business purpose, you can deduct $90 from your income. Just make sure that you keep the receipt.

Keep in mind that if you were to take a client to talk about a project over a hot dog or nachos at a ballgame, you could only deduct 50% of the cost of the meal if separate and you retain a receipt, not the ticket for the game or any other associated costs.

Meals that may be 100% deductible 

There are a few meals that you can deduct 100% from your income.

• Meals for company parties and events: Meals you provide for company-wide social events, like a picnic or holiday party. The caveat is that the event must be open to all employees and primarily benefit employees who aren’t highly compensated.
• Meals treated as employee compensation: Meals you provide employees that are included in their wages and reported as taxable income.
• Promotional meals: Meals you provide to the general public to promote your business at trade shows or other events.
• Meals sold to customers: Meals you sell to customers. The IRS considers these meals to be your business’s product, not a perk.

Meals that are no longer deductible

As we mentioned, meals that you provide for your employees on site at your workplace for their convenience are no longer deductible. Meals that are no longer deductible include coffee and other beverages, breakroom snacks, catered lunches, or an on-site cafeteria.  

Client meals vs. entertainment costs

Client meals and entertainment often go hand in hand, but it’s important to distinguish between the two if you want to deduct 50% of client meals from your income. Entertainment is not deductible, and if you lump together the cost of client meals and entertainment, you won’t be able to deduct either one.

Here are a few examples to help demonstrate the difference:

• You take a client to dinner before a concert and pay for each separately: In this case, you can deduct 50% of the cost of dinner, but not the cost of the concert ticket.
• You take a client golfing and get lunch at the clubhouse afterward: In this case, you can deduct 50% of the cost of lunch at the clubhouse, but not the cost of the green fees.
• You book a package deal for client outing that includes food, drinks, and tickets: In this case, you cannot deduct any of the costs, since the food is packaged with the entertainment in one price.

Quick-reference table: Deductible vs. nondeductible meals in 2026 

Can I deduct meals without a receipt?

Local business meals require a receipt. When traveling overnight, the IRS only requires you to have receipts for meals that are $75 or more. However, that doesn’t mean that you can skip keeping proper documentation of cheaper meals. Regardless of whether you have a receipt, it’s important to keep detailed records in case the IRS audits you. A little routine bookkeeping throughout the year beats trying to reconstruct months of meals from memory, come tax season.

What the IRS wants on your receipt 

The receipt itself should show the total amount of the business meal, including the tip and tax. In addition to a receipt, you should also keep detailed records indicating:

• The date
• The location
• The business reason
• Who was present and their business relationship

Keeping this information organized as you go, whether it’s in a spreadsheet or even a dedicated folder, makes it much easier to back up your deductions if the IRS ever asks.

Can I deduct meals if I was not present?

In most cases, you need to be present to deduct business meals from your income. The one clear exception is meals provided as part of an employee’s taxable compensation. However, there are a few scenarios when it can get complicated:

• You send a meal (like a gift basket) to a client: In this case, the meal doesn’t count as a business meal, but rather as a gift. You can deduct up to $25 per recipient per year for business gifts.
• You cater a business meal you don’t attend: If an employee attended and can substantiate the business purpose, names of attendees, and other required details, you may still be able to deduct 50% of the meal.
• You order lunch for your team when you’re out of the office: In this case, you won’t be able to deduct the meal, because it will be treated as an on-site meal, which is no longer deductible in 2026.

The rules around what business meals are deductible and what aren’t can be complicated. The good news? Your local Jackson Hewitt Tax Pro is here and happy to help you figure out all year round. Find tax services near you today. Walk in or book now.