Are business meals deductible at 50 percent?

The rule in one paragraph

Publication 463 (2025) says you can no longer deduct entertainment, amusement or recreation, but you can keep deducting 50% of the cost of business meals if you or an employee is present and the food or beverages are not lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact. Meals while traveling away from home on business, whether you eat alone or with others, and meals at a business convention or business league meeting are named as examples. The 50% limit applies to employees and their employers, and to self-employed people and their clients, depending on who is reimbursed.

What goes into the 50%

Taxes and tips on a business meal are part of its cost and are subject to the limit. The cost of getting to and from the meal is not part of the meal’s cost, so a taxi or parking charge for a client lunch is outside the 50% limit. The publication adds that the limit is applied last: first figure what would be deductible under the other rules, then take 50%. It also applies to meals tied to producing income, including rental or royalty income, and to the cost of meals in deductible educational expenses.

Lavish or extravagant meals

A meal that is lavish or extravagant gets no deduction for the excess. The publication says an expense is not lavish if it is reasonable based on the facts and circumstances, and that a meal is not disallowed merely because it costs more than a fixed dollar amount or takes place at a deluxe restaurant, hotel or resort. Its own example: you spend $200 including tax and tip, $110 is not allowable because it is lavish and extravagant, and the remaining $90 is subject to the 50% limit, so your deduction cannot exceed $45. You can reproduce that example in the calculator above.

The 80% rule for hours-of-service workers

If you are subject to the Department of Transportation’s hours-of-service limits, you can deduct 80% of the meal expenses while traveling away from your tax home, for meals during or incident to a period subject to those limits. The publication lists certain air transportation workers under FAA rules, interstate truck operators and bus drivers under DOT rules, certain railroad employees under Federal Railroad Administration rules and certain merchant mariners under Coast Guard rules. The percentage is applied to Form 2106 in place of 50% where that form is used.

The six exceptions to the 50% limit

The limit does not apply to: expenses treated as compensation to an employee and as wages; an employee’s expenses reimbursed under an accountable plan; a self-employed independent contractor’s expenses that the client reimburses when adequate records are provided to the client (the client then takes the 50% limit); recreational expenses for employees, such as a holiday party or summer picnic; meals provided to the general public as advertising or to promote goodwill; and meals you actually sell to the public, as a restaurant does. Figure A in the publication walks through the reimbursed case, and it ends in one of two places: either the 50% limit applies, or you cannot deduct the expense at all because the reimbursement was not treated as wages.

Taking turns paying

If a group of business acquaintances takes turns picking up each other’s meal checks primarily for personal reasons, without regard to whether any business purpose is served, no member of the group can deduct any part of the expense. The business purpose has to exist and you need records for it; our records page covers the substantiation elements, and the restaurant receipt must show the name and location, number of people served, date and amount.

Where the 50% shows up on your return

A sole proprietor reports deductible non-entertainment meals on Schedule C, line 24b, after the 50% reduction. A farmer using Schedule F can include only 50% of meals on line 32. Employees who may still use Form 2106 enter the full meal amount and then 50% of it on the form. For a broader estimate that adds other categories, see the meals and entertainment deduction calculator; for the travel version, see the standard meal allowance.

Worked example

You take a prospective client to dinner and the bill is $180 with tax and tip, and a $20 cab each way. Nothing is lavish. The meal deduction is $90 (50% of $180). The cab fare is not part of the meal’s cost and is not subject to the 50% limit; it is deductible if it otherwise qualifies as a business transportation expense. If you were an employee and the same dinner were reimbursed under your employer’s accountable plan, you would not be subject to the limit on it (Exception 2).

Sources

• IRS Publication 463, Travel, Gift, and Car Expenses (2025): Chapter 2, Meals; 50% Limit; Figure A; Exception to the 50% Limit for Meals; Individuals subject to “hours of service” limits; chapter 1, 50% limit on meals. Read November 2, 2026.

Edition read: Publication 463 (2025), for use in preparing 2025 returns. Rates and dollar limits on this page are the 2025 figures printed in that edition; check the current publication, form instructions and GSA.gov per diem tables for your tax year. This page summarizes the publication and does not replace it.