One Big Beautiful Bill & Meal Expenses

When the One Big Beautiful Bill was passed, there was confusion on meal expense deductions. While the bill did affect meals expense deductions, it was in more subtle ways.

To start, meal expenses are usually 50% deductible, unless you are a restaurant or otherwise selling meals to the public. There are a few exceptions, such as meals provided for employees at office parties or if the meal gets reported as wage income on a W-2. These items are unchanged under OBBB.

Changes to Meal Expense Under New Tax Legislation

There are three key terms for understanding the tax treatment of meals under OBBB:

• Eating facility
• Convenience of the employer
• De minimis fringe benefit

The tax bill’s biggest effects relate to employer-provided eating facilities. The bill amends Sec. 274(o) to disallow any deduction for employee cafeterias for expenses incurred after December 31, 2025. An exception allows meals provided to crew on commercial vessels, oil/gas platforms, and certain remote fish processing facilities to remain deductible.

If your workplace doesn’t have a cafeteria, OBBB still can affect meal deductibility. This is where the “convenience of the employer” and “de minimis” terms come into play.

Consider a possible workaround to the deduction ban on employee cafeterias. A company might hire a restaurant to deliver gourmet meals to its employees. This would generally be excludible from employee income under the “convenience of the employer” rule of Sec. 119.

Under OBBB, the employee exclusion for “convenience of the employer” meals remains, but meals covered by the Sec. 119 “convenience” exclusion are no longer deductible for the employer. This would extend, for example, to busy season meals provided to tax prep staff.

That’s where the “de minimis” rules provide some relief. These items are excluded from employee income separately from the “convenience of the employer rule.” Treasury Regulation Sec. 1.132-6(e) lists “coffee, doughnuts, and soft drinks” as examples of these fringes. Also excluded are “occasional cocktail parties, group meals, or picnics for employees and their guests”.

A key word here is “occasional.” It’s not presently clear where you cross the line from “occasional” to non-deductible.

Business meeting meals remain 50% deductible, provided they’re not lavish and meet the business purpose and documentation requirements of Sec. 274. Per diem meal reimbursements also retain their 50% limit.

Next Steps for Meal Deductions

Business meals and per-diem meal reimbursements are as deductible as they were before OBBB, but special circumstances apply and must be taken into account — especially in reference to employer-provided eating facilities.

Our dedicated tax team can help you make sense of the new tax legislation and what it means for your organization.