The Consolidated Appropriations Act, 2021, increased the business meal deduction for the cost of food and beverages from 50% to 100% for 2021 and 2022, under certain conditions. This temporary 100% deduction can be utilized when the standard 50% limit continues to apply for purposes under Section 274 of the Internal Revenue Code. The Act provides a 100% deduction on business meals and beverages provided by a restaurant, including any carry-out or delivery meals, as long as a business owner or employee is present. Thus, the meal expense must not be lavish or extravagant under any circumstances. The Act excludes any foods or beverages that are sold pre-packaged and are not for immediate consumption. Foods purchased from grocery stores, liquor stores, convenience stores, and vending machines are disqualified from the 100% deduction, and the 50% deduction would then apply to those expenses. Additionally, food purchased from an onsite cafeteria for the purpose of furnishing employee meals or any employer-operated eating facility does not count as a qualifying restaurant.
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