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2018 Tax Reform Meals & Entertainment Changes

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There were some changes made in 2018 to tax deductions for meals and entertainment that will affect many companies.

For 2018 the deduction of Entertainment expenses is disallowed. The current 50% limit on deductibility of business and travel meals is expanded to include Meals provided through an in-house cafeteria or on the premise of the employer. In order for meals to be considered 50 percent deductible business must be discussed during the meal with clients or coworkers. If no business is discussed the meal is not deductible for tax purposes and thus should be considered entertainment. Company activities, such as holiday parties, birthday and anniversary celebrations, picnics, etc. are still fully deductible in 2018. Generally, you also cannot deduct amounts paid or incurred for membership in any club organized for business, pleasure, recreation or any other social purpose. These types of expenses should be classified as: nondeductible dues.