Is entertainment deductible after 2017?

What changed and what stayed

Publication 463 (2025) says you can no longer take a deduction for any expense related to activities generally considered entertainment, amusement or recreation, while 50% of business meals remains. The practical question is therefore how to split a bill that has both, and the publication answers it with three worked examples. Entertainment is defined as any activity generally considered to provide entertainment, amusement or recreation, such as nightclubs, social, athletic and sporting clubs, theaters, sporting events, yachts, or hunting, fishing and vacation trips. It can also include meeting personal, living or family needs of individuals, such as providing meals, a hotel suite or a car to customers or their families.

The three examples

In the first, Taxpayer A takes a business contact to a baseball game and buys the tickets, then buys hot dogs and drinks at the stadium. The tickets are entertainment and not deductible. The food, purchased separately, is not an entertainment expense, so A may deduct 50% of the hot dogs and drinks. In the second, Taxpayer C buys basketball tickets for a suite whose invoice includes food and beverages without stating the food cost separately. The food is also an entertainment expense, so nothing is deductible. In the third, the same suite invoice separately states the cost of the food and beverages. The tickets other than the food are not deductible, but 50% of the separately stated food and beverage cost is. The calculator above follows these three outcomes.

A warning about inflating the food

The publication says the entertainment disallowance rule may not be circumvented by inflating the amount charged for food and beverages. A separately stated food line has to be a reasonable charge for the food, and it still has to be ordinary, necessary and not lavish. If a vendor shifts a large share of a ticket price into a “food” line, expect the number to be questioned. Also note that any item that could be either a gift or entertainment is generally treated as entertainment, with the exception of packaged food or beverages you give a customer to use later, which are a gift.

Facilities, club dues and similar costs

Costs of using an entertainment facility, including depreciation and operating costs such as rent, utilities, maintenance and protection, are not deductible. A facility is any property you own, rent or use for entertainment, such as a yacht, hunting lodge, fishing camp, pool, tennis court, bowling alley, car, airplane, apartment, hotel suite or vacation home. Dues, including initiation fees, for any club organized for business, pleasure, recreation or other social purposes are also not deductible, including dues for country, golf and athletic clubs, airline clubs, hotel clubs and clubs operated to provide meals in circumstances generally considered conducive to business discussion. The club’s purposes and activities decide, not its name.

Exceptions where the cost is still deductible

The publication lists a few. Entertainment treated as compensation on your originally filed return and as wages to the employee; recreational expenses for employees, such as a holiday party or a summer picnic; expenses for attending business meetings or conventions of certain exempt organizations such as business leagues, chambers of commerce and professional associations; and entertainment you sell to customers, as a nightclub does with a floor show. Whether an activity is entertainment may also depend on your business: a fashion show for store buyers is typical for a dress designer, but for an appliance distributor holding one for the spouses of retailers it is generally entertainment.

Separating one charge into pieces

If one expense includes entertainment and other services, such as a hotel room charge that also covers lounge entertainment, you must allocate between the two on a reasonable basis. The same is true when a hotel includes meals in the room rate. Keep the itemized bill. Related reading: the 50% meal rule in full and the general meals and entertainment calculator.

Worked example

You buy two tickets at $200 each ($400 total) for a game and, separately at the stadium, spend $60 on food and drinks for you and your client. Nothing is lavish. The $400 is not deductible. The $60 is a meal, so $30 is deductible. If the $60 had been rolled into a single $460 invoice with no separate line, the whole $460 would be entertainment and the deduction would be zero. Our figures; the logic is Examples 1 and 2 of the publication.

Sources

• IRS Publication 463, Travel, Gift, and Car Expenses (2025): Chapter 2, Meals and Entertainment; Entertainment; Exceptions to the Rules; Examples of Nondeductible Entertainment; Gift or entertainment; Other rules for meals and entertainment expenses (Examples 1 to 3). 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.