There is an important tax change coming in 2026 that many business owners are not aware of, and it directly impacts one of the most common everyday expenses: meals.
If you are a business owner, this is something you need to understand now so you can properly track your expenses and avoid issues later.
What Is Still Deductible?
The good news is that business meals with clients or prospects are still 50% deductible.
This means if you take a client out to lunch and discuss business, you can still deduct half of that expense. This has not changed.
What Changed in 2026?
The big change is around employer-provided meals and snacks.
Starting in 2026, the following are now 0% deductible:
- Breakroom snacks
- Coffee and bottled water
- Meals provided on-site for the employer’s convenience
- Subsidized cafeterias
- Meals provided during shift overlap
Previously, many of these expenses were 50% deductible. That is no longer the case.
De Minimis Fringe Benefits Are No Longer Deductible
Items that were considered small perks for employees, such as:
- Office coffee
- Snacks
- Drinks
These were previously treated as 50% deductible de minimis fringe benefits.
Starting in 2026, these are now 0% deductible.
Are There Any Exceptions?
Yes, there are a few important exceptions:
- Restaurants can still deduct 100% of food and beverages provided to employees as part of normal operations
- Certain fishing industry operations may also qualify for exceptions
Why This Matters for Business Owners
This is where I see the biggest issue.
Most business owners (and even some bookkeepers) are currently lumping all meal expenses together.
That approach is going to cause problems moving forward.
If your expenses are not categorized correctly, you could:
- Overstate deductions
- Understate deductions
- Increase your audit risk
What You Should Do Now
Before 2026, take the time to:
- Separate client meals from employee meals and snacks
- Update your bookkeeping categories
- Review how your expenses are currently being tracked
- Work with your tax advisor to ensure compliance
Watch the Quick Video Breakdown
I walk through this change in a quick video here:
https://youtube.com/shorts/XAGMSYg9QRQ?si=rxeO3sXHY-r6H_wz
Want to Go Deeper?
If you want to better understand how tax strategies like this impact your business, take my Financial Literacy Quiz:
https://go.gundersonsbookkeeping.com/financialliteracyquiz
Need Help Implementing This?
If you are unsure whether your books and tax strategy are set up correctly for 2026, let’s talk.