Meals & Entertainment Deduction Reverts to Pre-TCJA Law

Posted on July 31, 2023July 31, 2023

As of January 1, 2023, the meals and entertainment deduction has reverted to previous guidelines under the Tax Cuts and Jobs Act (TCJA). Put differently, the 100 percent deduction for food or beverages provided by a restaurant has officially expired.

The IRS advises that a 50 percent limit on meal expenses applies if that expense is otherwise deductible and is not covered by an exception. Exceptions will still exist under the applicable code section (IRC §274). This includes expenses for meals treated as compensation or recreational employee activities.

The following infographic simplifies guidance.

(Source: Hosman, Caroline. “Treatment of Entertainment Expenses.” Wolters Kluwer. ND.)

Also updated for the 2023 tax year is an adjusted applicable percentage for bonus depreciation on qualifying property. More specifically, for property placed in service after December 31, 2022, and before January 1, 2024, an 80 percent deduction is allowed in lieu of the previously available 100 percent deduction.

If you have questions, please contact Tyler Champagne, CPA, MSA, Tax Manager at 774.512.9012 or tchampagne@nullaafcpa.com—or your AAFCPAs tax advisor.

About the Author

Tyler Champagne, CPA, MSA

Tyler provides proactive tax planning & compliance solutions for private, closely held businesses and their owners & shareholders in a variety of industries, including construction, real estate, professional services, and technology. Tyler combines technical knowledge with proactive tax strategies. He advises clients on year-end and multi-year tax planning, including: guidance related to how business and personal decisions may impact your tax strategy; understanding the impact of changes in tax code; monitoring opportunities to maximize federal and multi-state tax credits; evaluating nexus and apportionment; and monitoring & forecasting of income and expenses to avoid year-end surprises. His depth of expertise ensures that clients are taking advantage of all available short and long-term tax benefits to minimize their tax liability.