Business Meal and Travel Deductions: What Is Deductible in 2026

The short answer: business meals are 50% deductible, entertainment is not deductible at all, and the cost of business travel away from home (airfare, lodging, rental cars, taxis) is 100% deductible, with the meals eaten on that trip still limited to 50%. The temporary rule that made restaurant meals 100% deductible expired at the end of 2022 and has not come back. Starting in 2026, a long-delayed provision of the Tax Cuts and Jobs Act also eliminates the deduction for most meals an employer provides to employees on its own premises. Everything below explains how to apply these rules and what records you need to keep the deduction if the IRS asks.

The 50% rule for business meals

A meal is deductible at 50% of its cost when four conditions are met. The expense must be ordinary and necessary for your trade or business. It cannot be lavish or extravagant under the circumstances, which in practice means a reasonable restaurant, not a question of a dollar cap. You or an employee must be present. And the food must be provided to a current or potential customer, client, supplier, consultant, or similar business contact. Meals with employees count too: taking your team to lunch to discuss a project is a 50% business meal.

The 50% limit applies to the whole bill, including tax and tip. A $120 dinner with a client produces a $60 deduction. Note what does not qualify: a solo lunch at your desk or at a restaurant near your office is a personal expense, not a business meal, because there is no business contact and you are not traveling. The IRS position is that you would have eaten anyway.

Entertainment is gone, but the meal inside it may survive

Since 2018, no deduction is allowed for entertainment, amusement, or recreation: golf outings, concert tickets, suite rentals, hunting trips, and country club dues are all 0% deductible even when a client is present and business is discussed. The One Big Beautiful Bill Act of 2025 made the Tax Cuts and Jobs Act provisions permanent, so this is not scheduled to change.

Food served during entertainment can still be a 50% business meal, but only if it is purchased separately or its cost is stated separately on the invoice. Hot dogs bought at the concession stand during a ballgame with a client are a 50% meal. A single ticket price that bundles seats and catering is entirely nondeductible unless the venue breaks out the food charge at a reasonable value. If you want the meal deduction, get it on a separate receipt.

Meals that are still 100% deductible

• Company-wide recreational or social events for employees, such as a holiday party or summer picnic, as long as they are not limited to owners and highly compensated staff.
• Meals you include in an employee's taxable wages, such as a cash meal allowance reported on the W-2.
• Food and beverages you sell to customers, or provide free to the general public as a promotion, such as refreshments at an open house.
• Meals treated as compensation to a non-employee and reported on a Form 1099, such as a contractor's meal that you reimburse and report.

What changed on January 1, 2026

Under Internal Revenue Code Section 274(o), which was written into the 2017 tax law with a delayed effective date, meals provided on the employer's premises for the employer's convenience, and food provided through an on-site cafeteria or as a de minimis fringe benefit, are no longer deductible for amounts paid after December 31, 2025. Through 2025 these were 50% deductible. The change hits break-room snacks, coffee service, catered lunches brought in to keep staff on site, and overtime meals. The One Big Beautiful Bill Act carved out exceptions for restaurants and other businesses that sell food to customers, and for certain fishing vessels and remote Alaska worksites, but for an ordinary office or shop the deduction is simply gone. The expense is still a legitimate business cost; it just will not reduce taxable income, so it belongs in its own general ledger account rather than mixed in with 50% meals.

Practical setup: keep three expense accounts in your books. Meals (50%), employee events and other 100% meals, and nondeductible meals and entertainment. Coding every receipt into the right account when it is recorded is far easier than sorting a single 'Meals & Entertainment' account at year end.

What counts as business travel

Travel expenses are deductible only when you are away from your tax home, which is the general area of your main place of business, for substantially longer than an ordinary workday, and you need sleep or rest to meet the demands of the work. A day trip to a client two hours away is local transportation, not travel: you can deduct the mileage or train fare, but not meals. An overnight trip unlocks the full set of travel deductions.

For a trip within the United States that is primarily for business, you can deduct 100% of the transportation to and from the destination (airfare, train, or vehicle costs), plus lodging, rental cars, taxis and rideshares, baggage fees, laundry, business calls, and tips, and 50% of meals. If the trip is primarily personal, none of the transportation is deductible, but you can still deduct expenses directly tied to business activities on specific days. The IRS looks at how many days were spent on business versus personal activities to decide which category a trip falls into. A spouse or child's travel costs are not deductible unless that person is an employee with a bona fide business reason to be there.

Trips outside the United States follow stricter allocation rules. If the trip lasts more than a week and more than 25% of the time is personal, the transportation cost must be split between business and personal days. Conventions and seminars held outside North America are deductible only if it was as reasonable to hold the meeting there as within North America, and the IRS expects a good reason for a conference on a cruise ship.

Using per diem rates instead of receipts

Rather than tracking every meal receipt on a trip, you can deduct a flat federal per diem for meals and incidental expenses. For the federal fiscal year that began October 1, 2026, the standard rate is $68 per day for most of the country, with higher rates in designated high-cost cities. Under the IRS high-low method in Notice 2026-60, the meals portion is $86 per day in high-cost localities and $74 everywhere else in the continental United States. Days of departure and return are counted at 75% of the full rate. Self-employed owners can use the meals per diem but must deduct actual lodging costs with receipts; the lodging per diem is available only to employers reimbursing employees under an accountable plan. The 50% limit still applies to the meals per diem.

The records the IRS actually requires

Meals and travel are among the most heavily scrutinized deductions because Section 274(d) imposes stricter substantiation than most other expenses. For each expense you must be able to show the amount, the date, the place, the business purpose, and, for meals, the business relationship of the people present. A receipt alone is not enough; a receipt plus a note that says 'lunch with Dana Reyes of Lakeside Builders re: Q1 roofing bid' is. Receipts are required for all lodging and for any other expense of $75 or more. The record needs to be made at or near the time of the expense. A spreadsheet reconstructed from credit card statements the week before an audit does not meet the standard and is the most common reason these deductions are disallowed.

At Stone Valley Accounting, the bookkeeping team codes meal and travel receipts into the correct deductibility bucket as they come in through the client's expense app, and flags receipts that are missing the who and why so the owner can add a one-line note while the lunch is still fresh. That small habit turns a deduction that often collapses under examination into one that holds, and it means the 50% adjustment is already computed before the tax return is started.

Quick reference

• Meal with a client, prospect, or vendor where business is discussed: 50%
• Meal while traveling overnight for business, eaten alone or with others: 50%
• Solo lunch near the office on a normal workday: 0%
• Golf, tickets, club dues, and other entertainment: 0%
• Separately stated food at an entertainment event: 50%
• Office snacks, coffee, and catered staff lunches on premises: 0% beginning 2026
• Holiday party or company picnic open to all employees: 100%
• Airfare, hotel, rental car, taxis, baggage, and laundry on a business trip: 100%
• Spouse's travel costs on a business trip: 0% unless the spouse is an employee with a business purpose

Key takeaway: the deduction is determined by who was there and why, not by where the money was spent. Write the business purpose and attendees on every meal receipt the same day, keep every lodging receipt, and separate 50%, 100%, and nondeductible items in your books so the tax return reflects the right numbers without a year-end scramble.