By Alan S. Kufeld, CPA, Partner
Key Takeaways
- Travel and meal expenses remain subject to strict Internal Revenue Service rules in 2025, with no changes introduced in the latest House tax bill.
Business owners must navigate post-pandemic expirations and Tax Cuts and Jobs Act limitations to accurately determine which expenses are deductible and at what percentage. - Most business meals and travel-related food expenses are only 50% deductible, while certain employer-provided meals, such as those tied to employee convenience or company events, remain 100% deductible.
Entertainment-related costs, including tickets to sporting events, are still nondeductible regardless of business intent. - Proper documentation is critical for ensuring compliance and preserving deductions, especially under Internal Revenue Service (IRS) scrutiny.
Maintaining records such as receipts, business purpose, names of attendees and travel details is essential for substantiating expense claims.
U.S. business owners have historically been challenged keeping up with tax laws governing the treatment of travel and meal expenses — even more so after the Tax Cuts and Jobs Act (TCJA) in 2017. The One Big Beautiful Bill Act (H.R. 1) as currently drafted and passed by the House on May 22, 2025, does little to clarify, having no provisions or changes related to meals and entertainment deductions. Adding to the confusion, many significant rule changes made during the pandemic have since expired.
So, what are the current rules surrounding travel and meal deductions that business owners and operators should know? Clearly understanding which expenditures qualify for a 50% deduction versus those that might be eligible for full deductibility is critical to ensure accurate reporting and maximize allowable deductions.
We invite you to follow our Guide below, which provides general information (The Basics), along with itemized details about what is/isn’t deductible, deduction limits (50% vs. 100%) and key tips to help you properly substantiate your deductions.
The Travel Basics: Allowable vs. Non-Deductible Items
Business travel includes trips that require you to be away from your primary place of business, commonly referred to as your tax home, for legitimate business purposes. Tax home is defined by the IRS as the taxpayer’s principal place of business (employment). Below is a breakdown of allowable versus non-deductible items.
Allowable Deductions- Transportation: Costs for airfare, train, car rentals, taxis, rideshares and local travel related to business.
- Lodging: Reasonable hotel or lodging expenses.
- Incidental Expenses: Tips, shipping of business materials, business communications and laundry or dry cleaning.
- Anything Personal: Personal travel expenses, costs for accompanying family members, commuting and unsubstantiated or lavish expenses are not deductible.
- If a trip combines business and personal activities, only the expenses directly attributable to the business portion are deductible.
- Travel or Tickets to Sporting Events: While a common business expense, tickets for or travel to sporting events are not deductible under current rules.
- The TCJA eliminated deductions for entertainment, amusement or recreation expenses — including tickets to sporting events — even if directly related to a business purpose.
Meals: The Basics
To be deductible, meal expenses must have a direct connection to the active operation or management of a trade or business. However, some are only partially deductible under TCJA rules.
Meal Deduction Limits: 50% vs. 100%
The following table provides you with a breakdown of the current rules for meal deductibility:
Expense Type | Deductibility |
Meals with clients, customers, or business associates (with proper documentation) | 50% |
Travel meals (while away from home for business) | 50% |
Office snacks or meals for employees | 50% |
Meals provided at business seminars or conferences | 50% |
Meals included in employee taxable wages | 100% |
Meals provided to employees for employer convenience (e.g., on premises during overtime) | 100% |
Company social events (e.g., holiday parties ) | 100% |
Note: The temporary 100% deduction for restaurant meals in 2021 and 2022 has expired.
Key Substantiation Tips for Both Travel and Meals
For travel, documentation should be kept on the purpose of the travel, along with anything required to differentiate between business and personal expenses.
To ensure deductibility of meal expenses amid potential Internal Revenue Service (IRS) scrutiny, consider maintaining the following documentation:
- Date and time of the expense, through your calendar.
- Location (restaurant name, city).
- Business purpose (what was discussed and how it relates to your business).
- Attendees and their business relationship to you.
- Receipts for all expenses of $75 or more.
Don’t Leave Anything on the Business-Trip Table
Deducting travel and meal expenses can provide significant tax savings for any business — in accordance with current IRS regulations, of course. So it’s critical to know the rules to properly document and substantiate your expenses, as well as differentiate between those that are 50% versus 100% deductible. We don’t want you to leave anything on the business-trip table that is legitimately yours to deduct.
Contact Us
f you have any uncertainty about how to apply the standards and tax rules to your specific circumstances, our professionals are available to assist you with tailored guidance. Please reach out to your PKF O’Connor Davies client service team or:
Alan S. Kufeld, CPA
Partner
akufeld@pkfod.com | 646.449.6319