IRS problems aren't as complicated as they look once you see the structure. I'm attorney Darrin Mish. I've represented taxpayers before the IRS for three decades — in Florida, Colorado, Texas, and internationally. Here's the plain-English breakdown.
Most Business Owners Still Get Meals and Entertainment Wrong
Three years after the entertainment rules got blown apart, I’m still seeing tax returns deduct golf with clients as if it’s 2017. It isn’t. The Tax Cuts and Jobs Act killed business entertainment deductions in 2018 and they haven’t come back. The One Big Beautiful Bill Act didn’t restore them either.
What changed in 2026: the OBBBA carved out new 100 percent deductions for meals on fishing vessels and offshore oil and gas drilling rigs. Useful if you operate one. Not relevant for most business owners.
What didn’t change but still trips people up: the difference between 100 percent, 50 percent, and zero. Most business owners and a surprising number of accountants get this wrong. Here’s the current picture for 2026 and beyond.
The 2026 Meals and Entertainment Cheat Sheet
| Expense | 100% | 50% | 0% |
|---|---|---|---|
| Restaurant meals with clients and prospects | X | ||
| Entertainment such as baseball or football games with clients | X | ||
| Employee meals for convenience of employer, served by in-house cafeteria | X | ||
| Employee meals for required business meeting, purchased from a restaurant | X | ||
| Meals served at a chamber of commerce meeting held in a hotel meeting room | X | ||
| Meals consumed in a fancy restaurant while in overnight business travel status | X | ||
| Meals cooked by you in your hotel room kitchen while traveling away from home overnight | X | ||
| Break-room coffee, doughnuts, and snacks for employees | X | ||
| Meals from a restaurant for employees working overtime | X | ||
| Year-end party for employees and spouses | X | ||
| Golf outing for employees and spouses | X | ||
| Year-end party for customers | X | ||
| Meals made on premises for the general public at a marketing presentation | X | ||
| Team-building recreational events for all employees | X | ||
| Golf, theater, or football outings with your best customers | X | ||
| Meals with prospective customers after a non-deductible round of golf | X | ||
| Meals for offshore oil and gas platform workers | X | ||
| Meals for qualifying fishing vessel crew and fish processing crew | X |
The Three Big Surprises in 2026
1. Breakroom Coffee, Snacks, and Overtime Meals: Zero
This catches almost everyone. The breakroom coffee, the doughnuts on Friday, the pizza for the team working late, none of that is deductible anymore. The TCJA dropped these to 50 percent starting in 2018, then to zero starting in 2026 under Section 274(o).
If your books are still running these at 50 percent, you’re overstating deductions. Fix it before the IRS does.
2. Restaurant Meals with Clients: Still 50 Percent (Not 100)
The 100 percent restaurant meal deduction was a temporary COVID-era provision that ended in 2022. If your bookkeeper is still running client lunches at 100 percent because that’s how it worked three years ago, you’re overstating deductions.
50 percent. That’s the right number for restaurant meals with prospects and clients in 2026.
3. Entertainment with Clients: Zero. Still Zero.
Golf with prospects. Football games with clients. Box seats at the basketball game. Hockey tickets. Theater outings. All of it is non-deductible. None of it has been deductible since 2018. The TCJA was clear and Congress hasn’t reversed it.
After 32 years of tax practice, I can tell you the most common audit-bait deduction I see on business returns is client entertainment booked as business meals. The IRS knows. Don’t do it.
The 100 Percent Deductions Most People Miss
Year-End Party for Employees and Spouses
The holiday party is 100 percent deductible if it’s primarily for employees. Spouses can attend. Section 274(e)(4) carves out a clear exception to both the entertainment disallowance and the 50 percent food and beverage cut.
This is the single best deduction left in the entertainment category. Use it.
Golf Outing for Employees and Spouses
Yes, you read that right. Golf for employees and their spouses is 100 percent deductible. Golf with customers is zero. The same activity, on the same course, with the same green fees, has wildly different tax treatment depending on who’s on the cart with you.
If you want to deduct golf, take your team. Not your clients.
Team-Building Recreational Events for All Employees
Same Section 274(e)(4) carve-out. As long as the event is for all employees (not just the C-suite or “key employees”), it’s 100 percent deductible. Bowling night. Mini-golf. Escape room. Company picnic. All in.
Meals at a Marketing Presentation Open to the Public
Section 274(e)(7) is one of the most underused provisions in the code. If you serve food at a public marketing presentation, a seminar, an open house, or a free educational event, those meals are 100 percent deductible.
Run a financial planning seminar with free dinner? 100 percent deductible.
Host a real estate open house with appetizers? 100 percent deductible.
This is how smart business owners convert marketing dollars into fully deductible client acquisition costs.
The 50 Percent Deductions That Still Work
These remain deductible at 50 percent in 2026:
- Restaurant meals with clients and prospects
- Meals purchased from a restaurant for required business meetings with employees
- Meals at chamber of commerce meetings held in hotel meeting rooms
- Meals consumed while traveling on overnight business
- Meals cooked in your hotel room kitchen while traveling overnight
The travel meal deduction is the most useful one on this list for most business owners. If you’re on the road overnight for business, the meals you eat in restaurants, in your hotel, anywhere, are 50 percent deductible.
The Zero Deductions to Stop Booking
These are non-deductible. Stop running them through the business books:
- Baseball, football, basketball, hockey games with clients
- Golf, tennis, theater outings with clients or prospects
- Country club dues and fees
- Year-end party for customers (treated as entertainment under the new law)
- Break-room coffee, doughnuts, and snacks for employees (as of 2026)
- Meals from a restaurant for employees working overtime (as of 2026)
- Employee meals served by an in-house cafeteria
That last one stings if you operate a cafeteria for employee convenience. The Section 274(o) phase-out hit 100 percent in 2026. Zero deductible.
The New OBBBA Carve-Outs
The One Big Beautiful Bill Act added two 100 percent meal deduction categories that didn’t exist before:
- Meals for crew members on qualifying fishing vessels and fish processing crews
- Meals for workers on offshore oil and gas platforms
If you operate in either industry, this is a real benefit. Document the meals. Tie them to qualifying workers. Take the full deduction.
If you don’t operate a fishing vessel or an offshore oil rig, this doesn’t apply to you. Move on.
How to Document This So It Holds Up
The deduction is only as good as the records behind it. For every meal expense, Section 274(d) requires:
- The amount
- The date
- The place
- The business purpose
- The business relationship of the people present
A credit card statement showing “Outback Steakhouse $87” is not enough. The receipt, the names, the purpose, all required.
For the 100 percent deductions like employee parties and marketing meals, the documentation requirement matters even more because the IRS scrutinizes those harder.
The Bottom Line
If your accountant is still running 2017 rules on your meals and entertainment, you’re either overstating deductions (audit risk) or understating them (leaving money on the table). Probably both.
The 2026 rules are not complicated. They are different from what most people remember. Get them straight, document everything, and stop deducting the things that aren’t deductible.
Get a Tax Strategy That Actually Works in 2026
If you’re not sure your meals and entertainment deductions are dialed in, or if you want a broader review of what’s deductible in your business, let’s talk. The Law Offices of Darrin T. Mish, P.A. handles tax planning and IRS controversy for business owners. Call (813) 229-7100 for a consultation.
