The One Big Beautiful Bill’s impact on meals and entertainment: What business owners need to know

The One Big Beautiful Bill Act (OBBBA) brings new rules for meals and entertainment deductions beginning in tax years after December 31, 2025. While the categories haven’t changed much, the deductibility rules have. For business owners, this means far fewer employer provided meals will qualify. Only a limited set of specific situations will still allow a deduction under the new law.

At a Glance

• Entertainment costs stay nondeductible (with only a few narrow exceptions).
• Business meals remain 50% deductible, but you still need proper documentation and a clear business purpose.
• Employer-provided meals become mostly nondeductible, including snacks, coffee, overtime meals, and meals served in on-site cafeterias. Exceptions include:
  • Meals provided by restaurants to their employees
  • Meals on fishing vessels
  • Meals sold to the public at full price in employer-operated cafeterias

Below is a table summarizing the changes:

Action Steps for Employers

Since the OBBBA significantly limits the deductibility of employer-provided meals, most businesses will need to make some operational and accounting adjustments. As you prepare for the 2026 tax year, consider the following:

• Review how your company currently provides meals and snacks. Identify where food is being offered (e.g., break rooms, cafeterias, meetings, overtime support) and determine which items will no longer be deductible.
• Update internal policies and communication. Employees may need clarity on what qualifies as a business meal going forward. Simple updates to handbooks, expense policies, or manager guidance can prevent confusion.
• Adjust your accounting and tax processes. You may need new general ledger categories, revised tracking procedures, and updated tax provision and return calculations to reflect the new limitations.
• Evaluate operational and financial impact. For companies with cafeterias or regular meal offerings, it may be worth assessing costs, pricing, and whether changes to operations make sense under the new rules.

We Can Help

The Elliott Davis team helps business owners adapt to the new tax requirements and the strategic decisions that follow. We can assist with policy updates, recordkeeping, and planning so you’re well prepared for the 2026 tax year. Contact us to discuss how these changes may affect your business and what steps to take next.

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The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.