New Deduction Rule Makes Business Meals Even More Appetizing

Take it from an accountant, the numbers don’t lie. In Maryland, new case counts are as low as they have been since the pandemic began, and over 70% of Maryland adults have received at least one vaccine shot. We are welcoming family and friends back into our homes and employees and clients back into our offices. After nearly 18-months, it feels good to finally have some positive news and a return to some semblance of normalcy.

As business operations transition to the new normal, there is a lost activity that is certain to return: the business meal. The restaurant industry was hit particularly hard by the pandemic, and to the extent that we can, we should try to help it recover. Fortunately, congress has already taken some action to help incentivize businesses to provide this support. The Consolidated Appropriations Act of 2021 includes a provision that temporarily provides a 100% business expenses deduction (rather than 50%) for the cost of food or beverages provided by a restaurant. Under a notice provided by the IRS, a restaurant is defined as a business that prepares or sells food or beverages to retail customers for immediate consumption regardless of whether the food or beverages are consumed on site. Notably this would not include grocery or convenience stores. The temporary period covers the 2021 and 2022 calendar tax years.

I encourage business owners to patronize their favorite restaurants and take advantage of this temporary full deduction for meals. Whether you are meeting with a long time client for a business dinner, or rewarding select employees with a lunch on the company’s dime, do so with the knowledge that you are receiving a full tax deduction while helping a local business get back to their normal. Utilize this deduction as much as you can now, as it certainly will not remain in place once the restaurant industry fully recovers, which hopefully is very soon.