Charles R. Kennedy, CPA, MBA
Vice President & Director of Tax Services

As business owners who have filed their 2023 tax returns this spring are aware, the temporary rules governing deductions for business-related meals and entertainment (M/E) during the Covid-19 pandemic expired at the end of 2022. That means the deductibility of expenses for business meals incurred during 2023 reverted to the rules established by the Tax Cuts and Jobs Act (TCJA) of 2017, which were in effect before the pandemic and remain in effect today.      

In early 2021 as the Covid-19 impact on businesses was reaching its height, the IRS boosted the deductibility of business meals to 100% as a temporary measure to help provide economic relief for the restaurant industry, which was hit particularly hard by Covid.

But once the Covid-era measure expired, the business meal deduction reverted to 50% as established by the TCJA. That means tax returns filed for the 2023 tax year this spring – or which remain to be filed on extension – must reflect the TCJA rules.

Entertainment events

Additionally, the IRS relaxed its regulations around food and beverage purchased for business purposes at an entertainment event such as a professional sports event. Under the TCJA, such food and beverage expenses are not deductible, but the temporary Covid-era rule allowed a deduction of up to 50% under certain circumstances.

If you have not yet filed your 2023 tax returns and were expecting a 100% deduction for business meals or 50% for food and beverage purchased at entertainment events, contact your GT Reilly tax advisor to discuss strategies for minimizing your taxes.

For a reminder of deductions for business-related M/E expenses established by the TCJA, see our chart: Meals-entertainment deduction.