Along with the recent passage of the Tax Cuts and Jobs Act (effective January 1, 2026) came a bit of ambiguity on the topic of meals and entertainment, namely what related expenses are deductible and to what extent they are deductible.
If you heard that employee snacks and beverages are now completely nondeductible, here is a quick update.
For most businesses and professional practices, ordinary breakroom snacks and drinks provided to employees are still generally 50% deductible for federal income tax purposes. This includes common items such as coffee, bottled water, soda, chips, or similar items kept in a staff breakroom.
Here is a practical rule of thumb:
- Breakroom coffee and snacks for employees: 50% deductible
- In-office employer provided staff meals: previously these were 50% deductible, they are now nondeductible
- Coffee and snacks for patients: 100% deductible if they are primarily consumed by the general public
- Expenses related to company events to boost morale for all employees (i.e. holiday or seasonal parties): 100% deductible
The underlying policy judgment is ordinary food and beverage expenses are essentially personal consumption for your employees, therefore employers receive a limited deduction for coffee and snacks. The primary exception is for occasional, company-wide events (such as annual or seasonal parties), where the expense is treated as an employee benefit (and coded to account 607 – employee benefits).
In conclusion, if you are mainly purchasing drinks and snacks for your patients, it can continue to be coded to office supplies. If for staff, it will need to be coded to account 783, meals, which is a 50% deductible account.
Please see the Meals and Entertainment information sheet and feel free to contact us with any questions.