A Tax Deduction to Help the Restaurant Industry

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Good Tax News?

This is a rare opportunity when we can discuss beneficial changes in the tax code. They give a ray of optimism for the hospitality industry, especially the restaurants across America. In a year where government restrictions have been brutal to the industry, the federal government lends a helping hand in the form of tax deductions aimed at stimulating business spending at restaurants. Incentives matter and do drive behavior, so color me optimistic and thankful for the change.

100% Tax Deduction for Meals

As part of the Consolidated Appropriations Act 2021 signed by the President on December 27, 2020, businesses will be able to deduct 100% of the cost of food and beverage provided by restaurants beginning in 2021 and continuing through 2022. Of course, the food and beverage spending must meet the ordinary and necessary definition required by the IRS rules to be deductible.

Out with 2020 Rules and in with 2021 Rules

For 2020, the following expenses are 50% deductible (but are 100% deductible for 2021 and 2022):
  • Client business meals
  • Meals during business travel
  • Meals in office with employees, owners, agents or directors
  • Meals provided for the convenience of the employer
  There are no limitations on dine-in or take-out food and beverage. So, no matter if you are having that business meeting in a restaurant or take-out, enjoy food and beverage with that business meeting and take a 100% deduction. This is a great opportunity to help the restaurant industry while enjoying your favorite food and beverage (while discussing business).   We all look forward to business returning to 100% open and welcome this IRS deduction to help stimulate spending at restaurants.

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