The Consolidated Appropriations Act, 2021, increased the business meal deduction for the cost of food and beverages provided by a restaurant from 50 percent to 100 percent in 2021 and 2022, if certain conditions are met. Notice 2021-25 explains when the temporary 100 percent deduction applies and when the standard 50 percent limit continues to apply. The 100 percent deduction is available for food or beverages provided by a restaurant when the business owner or employee is present and when the expense is not lavish or extravagant under the circumstances. The notice specifically calls out grocery stores, specialty food stores, liquor stores, convenience stores, vending machines and kiosks as examples of business that do not qualify as restaurants.
