Tax Reform Series 33 – Employer’s Deduction for Entertainment, Commuting Benefits, and Meals


Plain Language of Change:

  • Business expense deductions are eliminated or reduced as follows:
    • Deductions are eliminated for certain entertainment expenses after 2017The prior rule which allowed taxpayers to currently deduct research and experimental expenditures is eliminated.
    • Deductions are eliminated for transportation and commuting benefits after 2017 
    • Deductions are eliminated after 2025 for employer-provided meals that are excludable from an employee’s income or are de minimis fringes
  • Entertainment expenses, including expenses for a facility used in connection with entertainment, that are paid or incurred after 2017 generally are not deductible.
  • The exception that allowed deductions for entertainment expenses that were directly related to, or associated with, the active conduct of the taxpayer’s trade or business is eliminated
  • No deduction is allowed for meals expect for amounts that an employer pays or incurs after December 31, 2025, for (a) meals that are excludable from an employee’s income under Code Sec. 119(a) because they are provided to employees and their spouses and dependents for the employer’s convenience and on the employer’s business premises; or (b) food, beverage and facility expenses for meals that are minimis fringes

Detailed Analysis of Employer’s Deduction for Entertainment, Commuting Benefits, and Meals

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