50% Limit on Business Meal Deduction is Suspended for Meals Provided by Restaurants in 2021 and 2022

Taxpayers may generally deduct the ordinary and necessary food and beverage expenses associated with operating a trade or business, including meals consumed by employees on work travel. The deduction is generally limited to 50% of the otherwise allowable amount. (Code Sec. 274(n)(1))

Code Sec. 274(n)(2) provides certain exceptions to this 50% limit. However, under pre-Act law, there was no exception for meals provided by a restaurant.

New law. Under the Act, the 50% limit won’t apply to expenses for food or beverages provided by a restaurant that are paid or incurred after Dec. 31, 2020, and before Jan. 1, 2023. (Code Sec. 274(n)(2)(D) as amended by Act Sec. 210(a); Act Sec 210(b))