Unlocking Small Business Meal and Travel Deductions What You Can and Can't Claim

Navigating the world of tax deductions can sometimes feel like stepping into a maze without a map, especially for small business owners. One area that’s often confusing yet essential to understand is meal and travel deductions. Knowing what you can claim and what’s off-limits can help you keep more of your hard-earned money. Let's break it down in a casual, easy-to-understand way, so you can maximize your small business tax benefits!

Disclaimer: As new tax law is passed, this information may become outdated. We will update as new information is released. This information may not apply to certain situations or previous tax years (temporary relief or regulations for a specific tax year). If you have any questions, please reach out!

Understanding Meal Deductions

When it comes to meals, the IRS has specific guidelines on what is and isn't deductible. Here's the lowdown:

What You Can Claim

1. Business-Related Meals: You can usually deduct 50% of the cost of meals provided for business purposes for client meetings. This includes both food and beverages. For example, if you take a client out to lunch to discuss a project, that meal could be a deductible expense. This also applies to office meetings that would not be considered personal in nature (i.e. holding a lunch meeting daily could be considered personal) up to December 31, 2025. After this point, only client related meals will be deductible at 50%.

   
   

2. Meals During Business Travel: If you're traveling for business and need to eat, those meals can also be deducted. Just remember to keep a record of what you ordered and the business purpose of the trip. These would be considered 50% deductible. This will remain unchanged in 2026.

   
   

3. Employee Meals: If you provide meals to more than half the employees (for the convenience of the employer - i.e. making them work late or on weekends) those typically can be 50% deducted. This would also apply for office snacks that would be considered a de minimis fringe benefit. *** Update for 2026 tax year - these expenses will not be deductible under the new tax law.

   
   

4. Company Events: If you host a company party or event for employees and their families and/or the general public, you can fully deduct those meal expenses, given certain conditions. This will remain unchanged in 2026.

   
   

What You Can't Claim

1. Personal Meals: Meals that are purely personal in nature are not deductible. So, that Saturday brunch with friends? Not deductible.

   
   

2. Lavish or Extravagant Meals: The IRS does have guidelines about what constitutes excessive meal expenses, so you should aim for reasonability. It's best to avoid anything that could be perceived as a luxury.

   
   

3. Unsubstantiated Meals: You must keep adequate records of your meal expenses. Simply stating you spent $100 at a restaurant won't fly; you'll need receipts and records showing their business purpose.

   
   

Decoding Travel Deductions

Travel expenses can also offer significant deductions for small business owners. However, it's crucial to know the details.

What You Can Claim

1. Transportation Costs: If you incur costs for transportation to a business location, whether it's plane tickets, mileage on your car, or other forms of transport, you can deduct these expenses. For mileage, you can use the standard mileage rate set by the IRS or deduct actual expenses.

   
   

2. Lodging: Hotel stays during business travel can also be deducted. Just make sure they are reasonable and necessary based on your travel.

   
   

3. Meals on the Road: Just like we discussed earlier, meals you consume while traveling for business are generally deductible at 50%.

   
   

4. Other Travel-Related Expenses: Expenses such as tips for service staff, parking fees, and even rental cars can also be deducted when traveling for business.

   
   

What You Can't Claim

1. Commuting Expenses: Trips between your home and your primary place of business are generally not deductible. So, that daily drive to your office won’t count.

   
   

2. Personal Side Trips: If you extend a business trip for personal reasons, the costs associated with those extra days or activities cannot be claimed.

   
   

3. Lavish Spending: Similar to meals, excessively luxurious travel expenses are at risk of being scrutinized by the IRS.

   
   

Tips for Keeping Records

Now that we've covered what’s allowable and what’s not, let’s talk about keeping track of your expenses because good records will save you from headaches down the line!

• Use Apps: Consider using expense tracking apps or tools designed to help you keep your financial records organized.

  
  

• Keep Receipts: Maintain a folder (physical or digital) where you can store all receipts related to meals and travel.

  
  

• Log Details: Make notes on each receipt about the business purpose and attendees. This can be helpful if you ever need to substantiate your claims.

  
  

Conclusion

Understanding small business meal and travel deductions can feel overwhelming, but breaking it down makes it much more manageable. Keeping detailed records and knowing what you can and cannot claim is crucial for maximizing your tax deductions.

Whether you're enjoying a meal with a client or traveling for work, ensuring you're making the most of these opportunities can significantly impact your business's bottom line.

If you're feeling uncertain about navigating these waters alone, don’t hesitate to reach out for advice. Ready to tackle your meal and travel deductions? Let’s chat! Reach out now for personalized guidance tailored to your unique situation.