November 09, 2022

Check please: House introduces bipartisan legislation to extend business meal deduction

Current 100% business meal deduction set to decrease at end of 2022
One man and two women having dinner
In an effort to revitalize tourism and generate business for hospitality industries that were severely impacted by the pandemic (and which continue to face negative effects of inflation and high operating costs), U.S. Reps. Darin LaHood (R-IL) and Jimmy Panetta (D-CA) introduced the Service Worker Economic Stabilization Act last month. 

The legislation would extend the 100% deduction for business meals through the end of 2024 and reinstate the 50% Entertainment Business Expense Deduction.

“Our hospitality and tourism industry on the central coast of California continues to be impacted by inflation, labor shortages, and decreased business spending,” said Panetta.  “Ensuring our local businesses have customers during the week will give workers more regular hours and business owners more certainty, putting them on a path to a full recovery.” 

Noting that the business meal will always be a bedrock opportunity for restaurants, Association VP, Public Policy Aaron Frazier thanked LaHood and Panetta for continuing to support the restaurant industry through bipartisan legislation. “At a time when the industry is facing sky-high cost increases and an unknown economic future, any encouragement to partake of our hospitality is appreciated,” he said. 

According to the U.S. Travel Association, the food and entertainment service worker sector in particular would see a projected increase in total household income of $62B over the next two years if the legislation is passed. 

To qualify for the 100% meal deduction, the Internal Revenue Service advises that the following requirements must be met:
  • the business owner or an employee of the business must be present when food or beverages are provided
  • meals must be from restaurants, which include businesses that prepare and sell food or beverages to retail customers for immediate on-premises or off-premises consumption
  • payment or billing for the food and beverages occurs after December 31, 2020, and before January 1, 2023
  • the expense cannot be lavish or extravagant
Additionally, the cost of the meal can include taxes and tips. However, the cost of transportation to and from the meal isn't part of the cost of a business meal.

“State-mandated closures, inflation, and rising costs have wreaked havoc on communities and small businesses throughout Illinois, especially for our hospitality, travel, and tourism sectors,” said LaHood. “This bipartisan bill will provide support to affected small businesses and workers, giving them more certainty and helping them accelerate recovery.”