A temporary provision allows for a 100 percent deduction of expenses paid or incurred after December 31, 2020, and before January 1, 2023 for food or beverages provided by a restaurant.

This means you may see a higher deduction for business meals on your tax return this year. In order to qualify, the business expense must have been incurred at a restaurant. The IRS defines a restaurant as “a business that prepares and sells food or beverages to retail customers for immediate consumption, regardless of whether the food or beverages are consumed on the business’s premise”.

Meal expenses related to prepackaged food or beverages are excluded from the 100 percent deduction. The provision specifically excludes expenses from a grocery store; specialty food store; beer, wine, or liquor store; drug store; convenience store; newsstand; or a vending machine, or kiosk.

Excluded meal expenses are still subject to the 50 percent limitation.

The 100 percent deduction is also subject to the same rules as the 50 percent deduction.