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Position:
Doing business over a meal is the only means of marketing and advertising for many small businesses and self-employed individuals. The business meal deduction (currently limited to 50 percent of costs) is a fully legitimate deduction and should be fully deductible.
Status:
In July 2009, Rep. Neil Abercrombie (D-Hawaii) introduced legislation, H.R. 3333, to increase the current 50 percent federal tax deduction for business meals to 80 percent. The House Small Business Committee also recommended an 80 percent deduction as part of an economic-stimulus bill to help small businesses, but the measure did not get included in Congress's final stimulus bill.
Talking points:
1. Increasing the tax deduction for business meals to 80 percent would bring a needed boost to the nation's economy. Any change in restaurant operators’ bottom lines reverberates throughout America’s economy. According to National Restaurant Association 2007 research, raising the deduction to 80 percent would boost business meal sales by $8 billion a year and create a $26 billion increase to the overall economy.
2. When Congress reduced the meal and entertainment deduction in 1986, small business owners were hit hardest. Restaurants are the No. 1 preference for small business people who want to conduct meetings outside of the office; they're the conference rooms for small businesses. Two-thirds of people who claim the business-meal deduction are small-business owners who rely on the deduction to grow their businesses and stay competitive. The reduced deduction penalizes small businesses and the self-employed by raising their taxes.
Questions?
Contact Kathleen O'Leary at (800) 424-5156, ext. 5914 or koleary@restaurant.org.
Related Association news releases
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[July 27, 2009]
Restaurant Industry Applauds Legislation Introduced by Representative Abercrombie (D-HI) to Restore Business Meal Tax Deductions
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