United States: Changes to Meals and Entertainment Deductions
The Tax Cuts and Jobs Act (TCJA) of 2017 went into effect on January 1, 2018 and brought significant changes to rules governing meals and entertainment deductions. Prior to the TCJA, 50 pecent of meals and entertainment expenses were generally deductible. The new legislation, however, disallows entertainment expenses. Meals that are served on business premises for the convenience of the employer, moreover, are deductible at 50 percent, not fully deductible as previously. Holiday parties, however, are unaffected by the new law.
Organizations should modify their accounting and recordkeeping procedures so that deductible and non-deductible meals and entertainment expenditures are properly captured.