The U.S. Treasury Department and the Internal Revenue Service issued Notice 2021-25 providing guidance as to what expenses are eligible for the expanded tax deductions for business-related dining at restaurants.
Beginning January 1, 2021 through December 31, 2022, the tax deductions have been raised from the previous 50% limit on the amount that businesses may claim food or beverages to 100% of their food or beverage expenses paid to restaurants. To be eligible for this deduction, the business has to:
- Dine at a restaurant, which includes businesses that prepare and sell food or beverages to retail customers for immediate on-premises and/or off-premises consumption.
- The business owner or an employee of the business has to be present when food or beverages are provided.
- The expense cannot be lavish or extravagant under the circumstances.