The One Big Beautiful Act (OBBA) is on the Table, but Remember What’s Cooking from 2017: Tax Cuts and Jobs Act (TCJA) Meal Rules Served up in 2026. While the legislative spotlight has been on the OBBA, the Tax Cuts and Jobs Act of 2017 continues to be a force, especially as it applies to the meals deduction!
Effective January 1, 2026, newly effective TCJA provision section 274(o) will disallow 100% of employer expenses for providing:
- Meals for the convenience of the employer
- Meals in company cafeterias, including de minimis meals in cafeterias, and meals in cafeterias operated by third parties.
Meals for the benefit of the employer are generally meals that an employer provides on the premises to keep the employees on site to meet a customer deadline, increase production, or any other business need. These meals consist of breakfast, lunch, and dinner, and not snacks.
Regarding company cafeterias, many companies incurred hefty capital costs constructing cafeterias while considering the deductibility of the meals and operating costs as a mitigating offset to the overall cost of construction. Therefore, section 274(o) may increase the forecasted costs of these facilities.
Regarding de minimis snacks like donuts and soft drinks, these items will still be deductible at 50% of their cost. However, as noted above, if the de minimis items are sourced in an employer-operated cafeteria, the deduction is completely eliminated.
We will continue to monitor developments pertaining to TCJA and OBBA regulatory guidance and judicial decisions. If you have any questions, feel free to contact one of us at R&R Accounting and Tax!