Food and Beverage Expense Tax Relief

The US Treasury Department and the IRS issued Notice 2021-25 on April 8, 2021, providing guidance on tax relief for temporary deductions of 100% on food and beverage expenses for restaurants. 

Previously, eligible food and beverage expenses were normally only 50% deductible, but under the new notice, businesses can claim 100% of their food or beverage expenses as long as the business owner (or an employee of the business) is present when food or beverages are provided and the expenses are not lavish or extravagant. This temporary provision is valid for qualifying expenses beginning January 1, 2021, through December 31, 2022. 

In addition, eligible businesses include those that prepare and sell food or beverages to retail customers for immediate on-premises and/or off-premises consumption.  However, businesses that primarily sell pre-packaged goods, not for immediate consumption, such as grocery stores and convenience stores, are not eligible to take advantage of this deduction. 

Lastly, an employer may not treat certain employer-operated eating facilities as an eligible entity, if these facilities are operated by a third party under contract with the employer.

For more information regarding the new provision visit

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MBE CPAs PPP2 Qualification resource sheet can be downloaded here.