Which business meals can I deduct, and how does it work if I have an S-Corp?

Most business meals are 50% deductible for 2026. That covers meals with clients, prospects and employees, plus your own meals while you travel away from home on business.

Entertainment is not deductible at all. The 100% deduction for restaurant meals was temporary and ended with 2022.

If you have an S-Corp, the meal deduction moves from your return to the company's. The company reimburses you under an accountable plan and deducts 50% of what it pays you back.

Who this applies to

• Self-employed owners filing Schedule C who pay for meals with clients, prospects or employees.
• Owners who travel overnight for business and pay for their own meals on the road.
• S-Corp owners who put business meals on a personal card and expect the company to cover them.

Who it doesn't

• Restaurants and other businesses that sell food to customers. Food they sell, and some meals they give their own staff, follow separate rules.
• Workers subject to Department of Transportation hours-of-service limits, such as interstate truck drivers. Their travel meals are 80% deductible, not 50%.
• Businesses that run an on-site cafeteria or provide meals to employees for the employer's convenience. Starting in 2026, those costs are generally not deductible at all.

Which meals count as business meals

Internal Revenue Code section 274(k) and Treasury Regulation 1.274-12 set three conditions. All three must be met before the 50% limit even comes into play.

1. Not lavish or extravagant. A nice restaurant is fine. Spending far beyond what the business purpose calls for is not.
2. You or an employee is present. Sending a client a gift card to a steakhouse is not a business meal.
3. The meal is for you or a business associate. That means a current or prospective customer, client, supplier, employee, agent, partner or professional adviser.

The meal also has to be an ordinary and necessary business expense. Lunch with a referral partner to discuss a project qualifies. A weekly dinner with a friend who happens to be a client, where business never comes up, is a hard position to defend.

Meals you eat alone at home base are personal. The regulations say so directly: your own meals are nondeductible unless you are traveling away from home.

Is it 50% or 100% in 2026?

It is 50% for nearly every business owner. Section 274(n) caps the deduction for food and beverages at 50% of the cost, including tax, tip and delivery fees.

The 100% deduction for restaurant meals applied only to amounts paid in 2021 and 2022. It has expired, and the 2025 tax law did not bring it back.

A short list of exceptions allows 100%. These are the ones a small business owner might actually hit:

• Company parties and picnics held primarily for employees who are not highly compensated.
• Food offered to the general public, such as refreshments at an open house or in a customer waiting area, as long as the public eats most of it.
• Meals treated as wages and reported on the employee's W-2.
• Meals a client reimburses. If you are self-employed and account to your client for the meal, the client takes the 50% limit and you deduct your full cost against the reimbursement.

What about meals at a game, a golf outing or a concert?

The entertainment itself is not deductible. Tickets, greens fees and club dues are out.

Food bought separately from the entertainment, or listed separately on the bill, can still be a 50% business meal if the three conditions above are met. Publication 463 warns that inflating the food charge to cover the entertainment doesn't work.

Can I deduct meals when I travel for business?

Yes, if the trip takes you away from your tax home long enough that you need sleep or rest. Your own meals on that trip are 50% deductible, even when you eat alone.

You have two ways to figure the amount. You can track actual cost, with receipts. Or you can use the federal meals and incidental expenses rate, called the M&IE rate, for each day of travel, and keep records of the time, place and business purpose of the trip.

For travel on or after October 1, 2026, IRS Notice 2026-60 sets the simplified high-low M&IE rate at $86 a day in high-cost localities and $74 a day everywhere else in the continental United States. The 50% limit applies to the per diem amount, too.

Self-employed owners can use the per diem rate for meals only. Lodging is always deducted at actual cost.

What records do I need?

Write down five things for every business meal: the amount, the date, the place, who attended and their business relationship to you, and the business purpose.

Publication 463 says you generally need documentary evidence, such as a receipt, for lodging and for any other expense of $75 or more. A good restaurant receipt shows the name and location of the restaurant, the number of people served, and the date and amount.

The receipt proves the cost. It does not prove the business purpose, so add a note in your expense app the same day.

A worked example

How it changes for an S-Corp owner

On Schedule C, you deduct 50% of your business meals on your own return. After the S-Corp election, you are an employee of your company, and section 67(h) permanently bars employees from deducting unreimbursed work expenses.

So the deduction has to live on the company's books. There are two clean ways to get it there.

The company pays directly. Use a company card for business meals. The S-Corp records the expense and deducts 50%.

The company reimburses you. If you pay personally, submit the receipts and business purpose to the company within a reasonable time, and the company pays you back under an accountable plan that meets Treasury Regulation 1.62-2. The reimbursement is tax-free to you. Under Treasury Regulation 1.274-12, when an employer does not treat the reimbursement as wages, the 50% limit falls on the employer.

The same accountable plan covers mileage, the home office, phone and internet. If you set up the plan for one of these, set it up for all of them.

Two more S-Corp points. Meals with your own employees count as business meals at 50%, but a meal for you alone at home base is still personal, even though you are now technically the company's employee. And if the company provides meals on its premises for its own convenience, 2026 is the first year those costs are generally not deductible at all.

The bottom line

For 2026, business meals are 50% deductible, entertainment is not deductible, and the 100% restaurant rule is gone. Travel meals can use the M&IE per diem, $86 or $74 a day for travel from October 1, 2026, still at 50%.

For an S-Corp owner, the meal deduction only works if the company pays or reimburses it. An accountable plan with monthly receipts and a one-line business purpose per meal is what makes that hold up.

If you are weighing the S-Corp election or already made it and aren't sure your reimbursements are set up right, the 20-minute intro call is the place to start.