Business Expense Deductions Change

Business Expense Deductions Change

business expense

Under the new 2018 Tax Cuts and Jobs Act, the deductibility of bona fide business meals and entertainment expenses have significantly changed.

As of January 1, 2018, entertainment expenses are nondeductible unless they fall under the specific exceptions in Code Section 274(e), for example: “expenses for recreation, social or similar activities primarily for the benefit of the taxpayer’s employees, other than highly compensated employees” (i.e. office holiday parties are still deductible).

Meals provided to employees for the convenience of the employer are now only 50% deductible compared to 100% deductibility prior to the 2018 Tax Cuts and Jobs Act. Click here for some major modifications related to meals and entertainment.