How to Maximize Your IRS Meals Deduction: A Complete Guide for Business Owners

Let’s get straight to the point. To deduct meals properly, you need to follow the IRS rules. The IRS decides whether a meal deduction is allowed, so it’s important to understand their guidelines instead of guessing.

Step 1: Educate Yourself on What Counts as a Business Meal.

It’s not as simple as swiping your business credit card and calling it a day—the IRS has strict rules. Generally, for a meal to count as an IRS meal deduction, the meal must

• Have a business purpose (sorry, lunch dates with your honey boo boo aren’t business). To qualify meals should be provided to a current or potential business customer, client, consultant, or similar business contact.

• Be eaten with you (the business owner) or an employee present. You got to be there to promote or grow your business.

• Not be too fancy—no extravagant feasts unless you have a really good reason.

• Fit Your Industry’s Norms: The meal cost must be ordinary and reasonable based on your business sector.

• Overnight Travel: Meals during business travel are deductible only if your business trip has an overnight stay.

  
  

Real-Life Examples of Meal Write-Offs.

• Traveling for Work You travel to a conference, grab a meal on your way, stay the night, and grab another meal on the way back. Since this trip required an overnight stay both meals are deductible. You can also opt for a per diem, an annually updated tax deduction for meals and incidental expenses during business travel. The per diem amount varies based on your travel location and the tax year. You can read up on diem rules here.

  
  

• Meeting a Client (Even a Potential One)

  You have lunch with a potential client at a local restaurant. You can write off your meal because it’s part of trying to land a new client. If you’re picking up the tab for both, that’s deductible too! And a new tax rule: if you are trying to be savvy and buy a client meal at a grocery store instead of an overpriced restaurant, this meal is not deductible! Yup, you gotta spend money at a restaurant in order for it to be deductible.

  
  

• Meals for Employees

  If you feed your employees for the "convenience" of your business (like providing lunch because they’re working late or need to be on-call), you will be able to deduct those costs.

  
  

• Company Party Meals

  Hosting a holiday party or company picnic? You can write off the food costs. Cheers to that!

  
  

For more details, check out pages 14-17 of the IRS instructions, which explain these rules in simple language. This way, you can stop Googling and be confident in what’s deductible!

Step 2: Understand What’s Not Deductible.

Some expenses are not eligible for an IRS meals deduction. Here are a couple of examples:

• Snacking  or eating  solo lunch while working: Eating is generally a personal expense. We have to eat in order to function and unless there is a specific business purpose, snacking or a solo lunch does not qualify as a business expense. Sorry.

  
  

• Stocking your home office with groceries: Grocery bills for your home office aren't deductible for the same reason. Eating is a personal expense, unless your meal has a business purpose.

  
  

• Entertainment expenses: Meals and entertainment expenses often get incurred at the same time, but here’s the thing: while entertainment expenses are currently a no-go, meal write-offs are usually at least partially deductible. So, our suggestion is to separate your meal expenses from entertainment expenses as much as you can in your financials. Meals and entertainment expenses that are mixed together in your books become automatically non-deductible for tax purposes. Generally, if the cost of the food and beverages is stated separately from the cost of the entertainment on the bills, invoices, or receipts, you are allowed to take a deduction for the meals.

  
  

Step 3: Review Current Deductibility Rules for the Tax Year.

Once you figure out the main rules for what’s considered eligible meal expenses, you need to research what percentage is allowed to be deducted this year for your particular meal category. All the examples I mentioned above generally have limitations. In my experience, the Congress loves changing the meal deductibility rules, and they usually do it in December. One year, you might be able to deduct 100% of your meal costs, and the next year, it could change this deduction to zero. The third year, travel meals might be deducted at 80%, but employee meals are capped at 50%! This means you could be buying lunches all year only to discover in tax season that those meal costs aren’t as deductible as you thought. So, don’t go crazy with the meals unless you absolutely have to, because you never know what Congress will come up with before the beginning of the tax season.

Here is a list of most of the meal deductible expenses for 2023 and 2024.

What will we be able to deduct in 2025? At the moment of writing this blog we simply don't know.

Tax Pro Tip: If you reimburse your employees or contractors for their meals, those reimbursements currently deductible at 100%. But if you take your contractors out and pay out of your own pocket, the deduction is currently only 50%. So, it makes sense to look into reimbursements and accountable plans rather than paying for employee meals directly.

Step 4: Understand the IRS process.

Regardless of your tax entity set up (partnership, S corp, sole proprietor, or corporation), deductibility requirements and meal definitions remain the same. Meals expenses have their own dedicated column in all types of returns, and the IRS has the ability to compare the numbers in this column to industry averages based on your NAICs code indicated on your tax return. If your meal costs are significantly higher than average, your return may be flagged for an audit.. That’s why it’s important to categorize all your business meals properly and make sure that only meal expenses go in that column.

Step 5: Avoid Common Mistakes:

a) Not Keeping Good Records. The biggest mistake is not keeping good records. There’s an old tax rule called the Cohan rule, which the IRS follows. The IRS allows you to estimate and deduct expenses based on industry averages, except for travel, meals, and entertainment expenses.

• Forgot to keep records of your supply receipts? Look up the average for your industry and go ahead and deduct them on your tax return. Most likely the IRS will accept this assumption.

  
  

• Forgot to keep receipts for your meal expenses? Too bad! The IRS will disallow your deduction, impute additional tax, and add penalties on top of it.

  
  

So, remember that meal deductions need to be supported by actual records. If you can’t prove why a meal qualifies, your deduction will be denied.

Tax Pro Tip: Keep track of everything. Here are some tips on record keeping:

• Save receipts (or take pictures).

• Record the date, location, business purpose, who was there, and your relationship to them (just in case the IRS asks).

• Many accounting apps allow you to upload receipts and notes to track your deductions.

  
  

b) Trying to Write Off Meals That Don’t Serve a Business Purpose. Another mistake is trying to write off meals that don’t actually serve a business purpose. For instance, if you're just grabbing a quick lunch on the way to a client meeting, that's not deductible. It’s a non-deductible personal expense, which you would incur anyway (because, well, everyone gets hungry!). And remember, travel meals only count if you’re traveling far enough from your home that you need to stay overnight somewhere besides your home.

The Bottom Line.

IRS meal deductions can save you significant money. But understanding the rules—and staying on the IRS’ good side—will ensure you make the most of this tax perk. If you need help, our services are here for you. We've helped hundreds of small business owners with tax and accounting issues.