November 19, 2021 - On November 16, 2021, the IRS issued guidance that clarified that the meal portion of per diems is eligible to be treated as 100% deductible for 2021 and 2022. Per diem payments are sometimes made to employees who travel and consist of two parts—an amount for lodging and an amount for meals. Prior to the guidance, there was uncertainty as to whether per diem payments would be eligible for the new rules allowing a temporary 100% deduction for meals provided by restaurants.
This clarification will provide a huge tax benefit for companies that normally have large per diem payments such as trucking companies, construction companies, and companies with large sales departments.
Historically, meals provided by restaurants have only been 50% deductible to businesses. However, the Taxpayer Certainty and Disaster Relief Act of 2020 provided a temporary exception to this 50% deduction limitation. For expenses paid or incurred in 2021 and 2022, businesses will be allowed a 100% deduction for meals provided by restaurants.
For more information on the 100% exclusion and general meals and entertainment rules, see our article How to Deduct Meals and Entertainment in 2021.
Joe Hellman, CPA: February 12, 2025
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