---
title: New Tax Laws Impact Meals & Entertainment Expense Deductions for 2018
description: Under the tax reform legislation passed in late 2017, some deductions are reduced, and others have disappeared altogether. Yet, there are still some specific circumstances where the full 100% deduction still applies.
---

[Blog | Black Line Group](https://www.blacklinegrp.com/blog)

# [New Tax Laws Impact Meals & Entertainment Expense Deductions for 2018](https://www.blacklinegrp.com/blog/meals-entertainment-expense-deductions)

 Written by [Black Line Group Team](https://www.blacklinegrp.com/blog/author/black-line-group-team) | Sep 5, 2018 7:57:12 PM

The sweeping changes made to the US Tax Code for 2018 have a major impact on some of the food and entertainment expenses that businesses have been deducting for years. [Under the tax reform legislation passed in late 2017](https://www.blacklinegrp.com/blog/tax-reform), some of those deductions are reduced, and others have disappeared altogether. Yet, there are still some specific circumstances where the full 100% deduction still applies.

Sound confusing? Don’t worry. Here’s a brief primer on how the new tax laws impact meals and entertainment expense deductions for 2018.

## Changes to the Tax Law

It used to be that, in general, businesses could deduct 50% of entertainment expenses, and meals were deductible up to 100%.

Now, under the Tax Cuts and Jobs Act of 2017, entertainment expenses are nondeductible, and meals can be deducted up to 50%. These changes affect any expenses that occurred on or after January 1, 2018.

Here are some specifics from the new changes:

- Meals: Meals are now 50% deductible, and can be deducted at that rate if business was discussed (whether it’s an internal meeting or client-based meeting) or if it was a business trip-related meal. For instance, the following situations qualify as a meal and are thus 50% deductible:

- A meal with a client to discuss business

- A meal eaten by an employee while on a business trip

- Entertainment: Entertainment is no longer deductible. Things that count as entertainment are any activities that could be categorized as amusement or recreation. For instance, here’s a small list of some items that count as entertainment:

Of course, as with any tax-related change, there are exceptions to every rule and this is not an exhaustive list. We recommend that you to check with a tax expert on what applies to your business.

## Finding Tax Deduction Opportunities

While the new tax laws put more restrictions on what can be deducted, there are still a [number of exceptions](https://rsmus.com/what-we-do/services/tax/tax-alerts/dont-overlook-100-percent-deductions-on-meals-and-entertainment.html?cmpid=ppc:tx2018ppc:j13&gclid=EAIaIQobChMIsojf-Pi13AIVl4RpCh1Z-AamEAAYASAAEgJRIvD_BwE) which will be phased out in the future. The following are all types of meal and entertainment (M&E) expenses that may still qualify for a 100% deduction for the time being:

1. M&E expenses treated as compensation – expenses must be included as wages for income tax withholding purposes.
2. Reimbursed expenses – expenses paid for by other businesses under a reimbursement arrangement, so long as the taxpayer provides a breakdown of those expenses.
3. Expenses primarily for the benefit of employees – includes facilities, recreational or social activities for non-highly compensated employees.
4. Expenses for items available to the public – includes goods, services, or facilities made available by the taxpayer for the general public.
5. Expenses included as income for non-employees – expenses included in the gross income of non-employees as compensation for services rendered or as prizes.

Again, some of these stipulations will also change over time. For example, meals offered as a convenience to the employer are currently 50% deductible but will become 0% deductible in 2025. So, it will be important to continually monitor changes in the law as they pertain to meal and entertainment expenses.

## Documentation is Key

Experts believe [these areas](http://bakertilly.com/insights/meals-and-entertainment-expenses-for-2018/) will be among those most closely scrutinized by the IRS, so it will be vital that you have the proper documentation methods in place to track these events. Still, a tax professional should be able to guide you in establishing the proper accounting methodology.

While the new tax law is more restrictive, with a solid system for documenting these activities and a comprehensive understanding of the deduction requirements, you can continue to realize tax benefits from meals and entertainment expenses.

[View full post](https://www.blacklinegrp.com/blog/meals-entertainment-expense-deductions)

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