Guidance for 2026 deductions on meals, travel and other entertainment expenses

Understanding the latest guidance on deductibility for meals, travel and other entertainment expenses is essential for businesses to remain compliant while maximizing tax benefits. The rules have evolved for tax years beginning in 2026, bringing new opportunities and clarifications impacting various expenses from business meals and employee events to industry-specific exemptions for certain sectors such as fishing. This article breaks down what’s deductible, what’s not and key changes in the year ahead.

Club dues and membership fees

Generally, you cannot deduct amounts paid or incurred for membership in any club organized for business, pleasure, recreation or any other social purpose. This includes country clubs, golf and athletic clubs, hotel clubs, sporting clubs, airline clubs and clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. It should be noted that the following organizations are not treated as clubs organized for business, pleasure, recreation or other social purpose unless one of the main purposes is to conduct entertainment activities for members or their guests or to provide members or their guests with access to entertainment facilities.

• Boards of trade
• Business leagues
• Chambers of commerce
• Civic or public service organizations
• Professional organizations such as bar associations and medical associations
• Real estate boards
• Trade associations.

Business meals and travel

100% deductible

Your meal expense is not subject to the 50% deduction limit if the expense meets one of the following exceptions.

1. Recreational meals: Meals provided to all employees for recreational/social purposes.
2. Advertising expenses: You are not subject to the 50% limit if you provide meals or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit.
3. Sale of meals: You are not subject to the 50% limit if you actually sell meals, goods and services, or use of facilities to the public. For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is not subject to the 50% limit.
4. Industry-specific exemptions:

• A restaurant or catering business that provides meals to employees and sells food and beverages to customers in a bona fide transaction
• New starting in 2026: Fishing industries (think vessels and processing facilities)
• Unchanged: Commercial vessels, if meals required under Federal law or operating in specific areas, oil and gas platforms or drilling

50% deductible

In general, you can deduct only 50% of your business-related meal expenses. The 50% limit applies to employees or their employers and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. The 50% limit applies to business meal expenses you have while:

• Traveling away from home, whether alone or with others, on business
• Attending a business convention or reception, business meeting or business luncheon at a club.

Charitable contributions

• You may deduct charitable contributions of money or property made to qualified organizations.
• Contributions must actually be paid in cash or other property before the close of your tax year to be deductible, whether you use the cash or accrual method.

Next steps

Taxpayers should review policies and identify what will change in 2026 to best prepare themselves for the year ahead. It is important to keep good records of amount, date, business purpose and who attended. If you have questions on how the above may impact your tax situation, please reach out to your Baker Tilly tax advisor.