The Tax Cuts and Jobs Act (TCJA) enacted extensive changes to the deductibility of meals and entertainment (M&E) expenses for companies.
Prior to the new tax law, companies generally could deduct 50% of expenses for business-related meals & entertainment expenses. Further, employer-provided meals for employees on the employer’s premises and meals for the convenience of the employer were both 100% deductible.
With the enactment of the TCJA, entertainment expenses paid or incurred after December 31, 2017 are no longer deductible. Employer-provided meals and meals provided for the convenience of the employer are limited to a 50% deduction. This includes food and beverages provided to employees at the company facilities, such as an on-premises cafeteria. Expenses for recreational, social or similar activities primarily for the benefit of the taxpayer’s employees, other than highly compensated employees, are still fully deductible.