Business Meals, Travel, and Mixed-Use Deduction Rules Under OBBBA
The One Big Beautiful Bill Act (OBBBA) reshapes how everyday business expenses are
treated, particularly meals and employer provided food beginning in 2026. While many
travel and mixed-use deduction rules remain intact, the standards for documentation,
categorization, and deductibility are tightening.

For small business owners and 1099 earners, deductions for meals, travel, and mixed-
use assets are no longer just routine bookkeeping items. They are now closely tied to
income reporting accuracy and audit risk under OBBBA.

This page outlines what changes beginning in 2026, what remains unchanged for 2025,
and how to plan expense tracking proactively under the new rules.

​

​Business Meals with Clients and Prospects

What Remains Deductible
Business meals with clients, prospects, referral partners, or similar contacts remain 50%
deductible when standard requirements are met.

 

• To qualify, the meal must be:

• An ordinary and necessary business expense.

• Not lavish or extravagant.

• Attended by the taxpayer or an employee.

• Conducted with current or potential business contact.

• Separately stated from any entertainment.

The core framework for client and prospect meals did not change under OBBBA.

​​​

100% Deductible Meal Exceptions
Certain meals remain fully deductible when properly documented, including:

• Meals treated as taxable compensation to employees and included on Form W-2.

• Meals reimbursed under an accountable plan.

• Food provided at employee social events such as holiday parties or picnics.

• Meals made available to the general public, such as open house refreshments or

• promotional events.

• Meals sold at fair market value, such as a cafeteria operated as a real business.

• Limited industry specific exceptions.

These exceptions remain available, but documentation standards are critical.

​

Substantiation Requirements
OBBBA did not relax substantiation rules. Proper records must include:

• Date and location.

• Who attended.

• Business purpose.

• Receipt or approved per diem documentation.

If entertainment is involved, the meal cost must be separately stated or it may be
disallowed.

​

Employer Provided Meals
What Changes Beginning in 2026
This is the most significant meals related change under OBBBA.

Through Tax Year 2025
For tax year 2025 only, employer-provided meals that qualify under existing rules may
still be 50 % deductible.

This includes meals that meet:

• Convenience of the employer requirements.

• Onsite eating facility rules.

• Other pre-existing employer meal standards.

• ​

These deductions apply only to meals provided and paid for during the 2025 tax 

year. No new eligibility is created. These rules simply remain in effect through
December 31, 2025.

Beginning January 1, 2026, most of these employer-provided meals will no longer be
deductible unless a specific exception applies.

Beginning January 1, 2026

OBBBA introduces new rules that disallow deductions for most employer provided
meals that were previously 50% deductible. Meals provided for operational convenience
or workplace efficiency generally become non-deductible unless an exception applies.

When Employer Meals May Still Be Deductible
Employer provided meals may remain deductible when:

• The cost is treated as taxable compensation and reported on Form W-2.

• The meal qualifies under an existing exception such as an employee event, public 

        promotion, or meals sold at fair market value.

​

Planning Tip
Business owners should establish separate general ledger categories now for:

• Client meals at 50%.

• Meals qualifying for one hundred % exceptions.

• Employer meals that will become non-deductible in 2026.

• This prevents misclassification and cleanup at filing time.

​

Travel Deductions Under OBBBA
Largely Unchanged
OBBBA did not materially alter travel deduction rules. Existing standards under the
Internal Revenue Code continue to apply.

What Is Deductible

• Transportation to and from a business destination is fully deductible.

• Lodging is deductible when travel is primarily for business.

• Business portions of mixed purpose trips are deductible.

• Meals while traveling remain 50% deductible unless an exception applies

 

Mixed Purpose Travel
If a trip is primarily business:

• Transportation to and from the destination is deductible.

• Lodging and meals for personal days are not.

If a trip is primarily personal:

• Only direct business expenses are deductible

 

Spouse or Guest Travel

Travel costs for spouses or guests are not deductible unless the individual is an
employee and the travel serves a bona fide business purpose.

Substantiation
Travel remains a heightened substantiation category. Receipts, itineraries, and
documentation supporting business purpose are required.

​

Mixed-Use Deductions
Vehicles, Home Office, Phone, and Equipment
OBBBA did not change the allocation concept for mixed-use expenses. Only the
business use portion remains deductible. However, restored cost recovery provisions
increase the importance of accurate tracking.

Common Mixed-Use Categories

• Vehicles

• Home office

• Cell phone and internet

• Equipment used for both business and personal purposes

Vehicles and Bonus Depreciation
OBBBA restored 100% bonus depreciation for qualifying property placed in service in
2025 and later. Vehicles used in business may qualify, subject to luxury auto limits.

Key rules still apply:

• Only the business use percentage is depreciable.

• Business use at or below 50% generally eliminates accelerated methods.

• Dropping below 50% business use after accelerated depreciation may trigger recapture.

A contemporaneous mileage log or tracking application is essential.

Home Office
The home office deduction continues to require:

• Regular and exclusive use.

• Principal place of business or client meeting location.

Deductions are calculated using square footage or the simplified method.

Phone and Internet

Deduct the business portion based on reasonable and defensible usage support.

​

Why Expense Tracking Matters More Under OBBBA
OBBBA raises expectations for how income and expenses align. While fewer taxpayers
may receive a Form 1099-K, income remains taxable and deductions depend on
accurate categorization.

For business owners, proper tracking now:

• Protects deductions for meals, travel, and mixed-use assets.

• Reduces reporting inconsistencies.

• Supports compliance as rules tighten in 2026.

• Limits risk at filing time.

​

Expense tracking is no longer passive bookkeeping. Under OBBBA, it is part of tax
strategy.

​​

Recommended Expense Planning Actions

• To stay ahead of the changes, business owners should:

• Separate client meals from employer provided meals.

• Review substantiation for meals and travel.

• Allocate business versus personal travel days accurately.

• Confirm business use percentages for mixed-use assets.

• Update charts of accounts to reflect new categories.

Early planning preserves deductions. Last minute fixes do not.

​

Request an Expense and Deduction Review
An expense and deduction review evaluates how OBBBA affects your meals, travel,
and mixed-use deductions and identifies areas of risk or opportunity.

A review includes:

• Expense categorization assessment.

• Meal and travel deduction review.

• Mixed-use asset allocation analysis.

• Documentation and substantiation guidance.

• Preparation support for 2026 changes.

​

Submit the form below to begin an expense and deduction review.

​

Frequently Asked Questions About Business Deductions Under OBBBA

Did OBBBA change client meal deductions?
No. Client and prospect meals remain 50% deductible when requirements are met.

What is the biggest meals related change?
Most employer provided meals become non-deductible beginning in 2026 unless an
exception applies.

Did travel deductions change?
No. Travel deduction rules remain largely unchanged, but substantiation is critical.

Why does 1099-K reporting still matter?
Because deductions depend on accurate income and expense alignment, not just
whether a form is issued.

Should business owners review their setup now?
Yes. Early review reduces risk and protects deductions.

​

Business Meals, Travel, and Mixed-Use Deductions Under OBBBA
OBBBA introduces stricter rules for employer provided meals and raises expectations
for accurate expense tracking. An expense review helps determine how meals, travel,
and mixed-use assets are treated under the new framework.

This review is designed for small business owners, employers, and 1099 earners who
want deductions to remain defensible under OBBBA.

​

​

​

​

Provide information about your business structure, income sources, and expense
categories. This review identifies deduction eligibility, documentation gaps, and planning
opportunities under OBBBA.