May 3, 2021 10:52 pm

What’s a Restaurant?

Usually, the cost of a business meal is 50% deductible. However, for 2021 and 2022, the cost is 100% deductible for meals furnished by restaurants. The IRS has now defined the term “restaurant” (Notice 2021-25). It does not include a business that primarily sells pre-packaged food or beverages not for immediate consumption, such as a grocery store; specialty food store; beer, wine, or liquor store; drug store; convenience store; newsstand; or a vending machine or kiosk. Remember that the applicable percentage also applies to per diem meal rates (e.g., GSA standard meal rates and the IRS’s high-low substantiation rate for business meals).

Basic rules for deducting business meals continue to apply. For example, they cannot be lavish or extravagant under the facts and circumstances and proper substantiation is required.

Tax Glossary


A relative or household member for whom an exemption may be claimed.

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