Business Meals vs. Entertainment: What’s Still Deductible?

Business Meals vs. Entertainment: What’s Still Deductible?

If you’re a business owner who takes clients to lunch, attends networking dinners, or hosts team outings, you’ve probably asked yourself: “Can I deduct this?” The line between a tax-deductible business meal and a non-deductible entertainment expense has gotten blurrier in recent years—and understanding the difference is critical to keeping your tax deductions and staying audit-safe.

Let’s start with the basics. Under the current IRS rules, most business meals are 50% deductible—but only if they meet specific criteria. To qualify, the meal must be directly related to the active conduct of your trade or business. That means you need a clear business purpose, and the meal must take place in a setting where business is discussed—like a client lunch, a team meeting over dinner, or a meal during travel.

It also needs to be “ordinary and necessary,” and you must be present at the meal. Simply sending a client a DoorDash gift card won’t cut it. You should also document who you were with, the business relationship, the date, and the purpose of the meeting—just in case the IRS comes knocking later.

Now, what’s not deductible? Entertainment expenses. The 2017 Tax Cuts and Jobs Act eliminated most deductions for entertainment, amusement, and recreation. That means things like sports tickets, concert outings, golf outings, or theater events—while potentially great for relationship-building—are no longer deductible, even if business is discussed. Buying a client courtside seats to an NBA game? You’re paying for that out of pocket, tax-wise.

There are a few exceptions. If the meal is part of an entertainment event but invoiced separately (like dinner before the show, on a different tab), that meal portion might still be 50% deductible. Also, company-wide holiday parties or meals provided for the convenience of the employer—like dinner for employees working late—can sometimes qualify for 100% deductibility under specific rules.

Confused yet? You’re not alone. The IRS rules around meals and entertainment are filled with nuance, and small mistakes can cost you big in lost deductions or added risk during an audit. That’s why it’s so important to keep detailed records, separate receipts, and lean on your CPA to review your practices.

Bottom line: Meals can still be a smart, strategic expense—as long as you know where the deduction line is. Don’t assume. Document. And make sure you’re not throwing away valuable tax savings with every business bite.

Stay empowered & stay protected,
Wealth Protection Alliance