Are catered employee meals tax deductible for companies in the U.S.?

When companies provide meals to their employees — whether a weekly catered lunch or coffee and snacks in the breakroom — one of the first questions their finance team asks is: “Are these meals tax deductible?”

From the IRS’s perspective, the answer depends entirely on why the meals are provided. Under Section 274 of the Internal Revenue Code, catered employee meals are generally treated as business expenses — but not all business meals are created equal. The rules draw sharp distinctions between meals for employee convenience, business meetings, recreation, and personal benefit.

As of 2025, most company-provided meals are still 50% deductible. But that changes in 2026, when the IRS will phase out many of these deductions altogether under Section 274(o).

Deductibility Rules for Catered Meals

Here’s how the IRS breaks it down today:

50% Deductible Meals (Common in 2025)

Most catered office meals fall under the 50% deduction rule — meaning you can write off half the cost. To qualify:

• The expense must be ordinary and necessary for business operations.
• The meal cannot be lavish or extravagant.
• There must be a clear business purpose — such as a meeting, training, or team work session.
• The company must keep detailed records (who attended, what the business purpose was, and the total cost).

So some examples of what fits the 50% deduction rule includes catered lunches for all-hands meetings, breakfast catering for training sessions, meals provided during long overtime shifts, and snacks in the office kitchen.

100% Deductible Meals (Special Circumstances)

Certain meal categories remain fully deductible:

• Company-wide events: Holiday parties, summer outings, or morale-boosting events for all employees.
• Meals included in wages: If the meal’s value is added to the employee’s taxable compensation.
• De minimis meals: Small, infrequent perks (like an occasional pizza for late-night work).
• Public promotions: Meals or samples given to customers or the public as part of a marketing effort.

"Convenience of the Employer" Test

The “convenience of the employer” test is the IRS rule that decides whether meals given to employees count as a legitimate business expense — not just a perk.

In simple terms the meal has to be mainly for the company’s benefit, not the employee’s comfort or preference.

Here’s how the IRS thinks about it:

• The meal helps the business operate smoothly — for example, keeping employees on-site during short breaks or urgent projects.
• It’s provided for a business reason, like late-night work, safety concerns, or keeping staff available during peak periods.
• It’s not about treating employees or making work more enjoyable — that would be considered a personal benefit, not a business one.

Examples that usually fail this test:

• Free lunch every day just to make employees happy.
• Catering to attract workers back to the office when remote work is possible.
• Meals provided off-site or at employees’ homes.

Catered meals provided on company premises — when they meet the “convenience of the employer” test — can qualify as 100% deductible through 2025.

Grey Areas and Common Food Deductibility Misunderstandings

The gray zone comes down to intent and documentation. Here are a few recurring problem areas we see across CaterCow’s clients:

• Everyday lunches: If employees simply “grab lunch together” without a clear business reason, it’s not deductible.
• Hybrid work setups: Meals delivered to remote employees usually don’t meet the “on business premises” rule.
• Frequent snacks: While de minimis benefits can be fully deductible, large or daily catered spreads likely don’t qualify after 2025.
• Client vs. employee meals: Meals shared with both clients and staff are only 50% deductible, even if part of a larger meeting.

“The IRS draws the line at business purpose. If you can show that the meal supported work — not just convenience — you’re on solid ground.”
— Sean Li, CEO, CaterCow

Records to Maintain for IRS Deductibility

The IRS is clear: no substantiation, no deduction. To protect your deduction in an audit, companies should maintain:

• Invoices or receipts from the caterer.
• Date, location, and purpose of each meal.
• Attendee list (or at least documentation that meals were for employees).
• Categorization (e.g., “training lunch,” “holiday event,” “client meeting”).

Most accounting team will create and maintain seperate internal tagging codes for employee meals (50%), client meals (50%), snacks and coffee (50%), and events and parties (100%)

Major Changes Coming in 2026

Beginning January 1, 2026, most deductions for employer-provided meals will disappear. That includes:

• On-site catering for convenience or overtime.
• Company cafeteria subsidies.
• Meals provided at or near the workplace.

Still deductible after 2025:

• Traditional business meals with clients (50%).
• Meals for food-service and maritime workers (100%).
• Company-wide events for all employees (100%).

For companies that rely on regular workplace catering, 2025 is the last full year to maximize current tax advantages.

The 2026 changes to the tax code — which eliminate most employer-provided meal deductions — are part of a broader rollback of temporary tax breaks introduced under the 2017 Tax Cuts and Jobs Act (TCJA).

The government wanted to reduce “perk-based” corporate deductions. Lawmakers argued that company-provided meals — especially free office catering, snacks, and cafeterias — had become a tax loophole used by high-income employers in tech and finance to provide untaxed benefits. By removing the deduction, Congress aimed to:

1. Limit subsidies for workplace perks that mostly benefit employees rather than business operations.
2. Redirect tax savings toward lowering corporate tax rates overall.
3. Simplify compliance and reduce IRS gray areas