Meals, Travel, and Entertainment: What’s Deductible in 2026 and How to Document It

Meals, travel, and entertainment are three separate categories with three different sets of rules. Mixing them up — or failing to document them properly — is one of the most common ways small business owners lose deductions during an examination. Here’s what’s deductible in 2026 and exactly how to document each one.

Business Meals: 50% Deductible

Business meals are deductible at 50% of the cost. The temporary 100% deduction for restaurant meals that existed in 2021 and 2022 has expired. We’re back to the standard 50% rule. To qualify, the meal must be directly related to the active conduct of your business, and you or your employee must be present. Buying lunch for a client meeting? Deductible at 50%. Grabbing lunch alone at your desk? Not deductible.

For every business meal, document who was there, the business purpose, the date, the location, and the amount. Write it on the receipt or log it in your bookkeeping system at the time. A credit card statement alone is not sufficient — it proves you paid, but not who was there or why.

Entertainment: Not Deductible

Since the Tax Cuts and Jobs Act, entertainment expenses are not deductible. Sporting events, concerts, golf outings, theater tickets — none of these are deductible, even if you discuss business during the event. The OBBBA did not change this.

There’s one important distinction: if you have a meal at an entertainment event and the meal cost is stated separately on the receipt, the meal portion can still be deducted at 50%. But the entertainment itself is not deductible. If the receipt doesn’t separate the meal from the event, the entire cost is non-deductible.

Travel Expenses: 100% Deductible (With Rules)

Business travel expenses — airfare, hotels, car rentals, taxis, baggage fees — are 100% deductible when the travel is primarily for business. The IRS defines business travel as travel away from your tax home that requires an overnight stay. A day trip to a client’s office in another city is local transportation, not travel.

If a trip has both business and personal days, you need to allocate expenses. Airfare is fully deductible if the primary purpose of the trip is business. Hotel and meal costs are only deductible for business days. Adding a personal weekend to a business trip doesn’t disqualify the business expenses, but you can’t deduct the personal days.

The Documentation Standard

The IRS requires substantiation under IRC Section 274(d) for meals and travel. That means you need to document the amount, date, place, business purpose, and business relationship of the person you’re dining or traveling with. These records need to be contemporaneous — created at or near the time of the expense, not reconstructed months later.

In your bookkeeping system, keep meals in a separate account from travel. Don’t lump them together. They have different deduction percentages, and the IRS expects to see them separated on your tax return.

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If your books don’t currently separate meals from travel, or if you’re not sure your documentation would hold up, schedule a consultation or take a look at our bookkeeping services.