Tax planning is an important part of owning and running a successful business. Entertainment and entertainment tax deductions have become a valuable way for many small business owners to reduce their tax liability each year. Unfortunately, the cost of the food rebate in 2023 will be halved from the rebate rates in 2022.
Read on as we share the details of the 2023 food and entertainment deduction. This information can help you take advantage of valuable tax deductions to save money. Some of you reading this have ditched their offices and had many meetings in restaurants.
The amount of tax deductions for meals and entertainment has changed in recent years. With the passage of the Tax Cuts and Jobs Act of 2018 (TCJA), also known as the Trump Tax Plan, you can no longer deduct entertainment expenses. The ticket price is no longer discounted if you want to be entertained at sporting events or treat your clients to a Broadway show.
There are other ways to deduct some expenses that qualify for the entertainment tax credit.
Discounts eligible for food and entertainment in 2023
It might make sense to discuss what else might qualify as a tax credit for the 2023 food and entertainment tax credit. Here are some possible tax deductions that may be partially or fully deductible.
Business lunch with clients (50%)
office food (50%)
Catering during a business trip (50%)
Food at the conference (50%)
Catering for corporate parties (100%)
Public food and drink (100%)
Dinner at the office for latecomers (100% )
Your guide to food discounts for 2023
In 2023, most business lunches are only 50% deductible under the IRS rule. Let's say you invite your favorite client to a wonderful dinner (to discuss business); You can deduct half the cost of the meal. However, if you go out to dinner with a non-profit client, there is no discount.
To add to the confusion, food expenses were 100% deductible in 2021 and 2022. This was a temporary change to increase restaurant spending during the COVID pandemic.