Starting in 2026, the tax treatment of business meals changes dramatically. Under the Tax Cuts and Jobs Act (TCJA), employer-provided meals for the “convenience of the employer” including de minimis fringe benefit were limited to a 50% deduction. Unlike many other provisions that were extended or made permanent by the One Big, Beautiful Bill Act (OBBBA), this one wasn’t renewed. That means beginning in 2026, the deduction for these meals drops all the way to 0% at the federal level.

In plain terms: that stack of takeout boxes in the breakroom may keep your team happy, but it won’t trim your tax bill.

The big change: convenience meals lose their bite

Currently, meals provided by employers for their convenience and de minimis fringe benefit “meals” such as coffee, sodas, doughnuts etc.— qualify for a 50% deduction. Beginning in 2026, those expenses will no longer be deductible for federal tax purposes.

The exceptions: The restaurant industry can continue deducting employee meal expenses for kitchen and waitstaff and Crews of certain commercial vessels, oil platform/drilling rig workers, and of certain fishing vessels and processing facilities can continue to be 50% deductible.

California doesn’t play by the same rules

Here’s where things get tricky: California doesn’t automatically follow federal law. The state conforms to the Internal Revenue Code as of January 1, 2015, with exceptions. That means California still allows a 50% deduction for meals provided for the convenience of the employer and 100% if qualify as a de minimis fringe benefit  — at least until lawmakers decide otherwise.

In practice, this means that after 2025 you may see:

  • Federal return: 0% deduction for convenience meals.
  • California return: 50% deduction.

That mismatch is enough to make anyone lose their appetite.

Planning pointers

  • Budget for the loss: If your business has relied on these deductions, prepare for the higher after-tax cost beginning in 2026.
  • Separate accounting categories: Track meal expenses by type (e.g., convenience meals, de minimis fringe benefit, entertainment, holiday parties, etc.) so you can clearly identify what’s deductible and where.
  • Communicate with staff: Free lunch may still make sense for morale, but not for tax savings.
  • Consider alternatives: Other employee perks — wellness stipends, professional development, or transportation benefits — may deliver more value going forward.

Bottom line

Beginning in 2026, employer-provided convenience meals are off the menu for federal deductions. Restaurant meals and certain specialized industries remain exceptions, while California will continue to allow a deduction for now.

So if you’re buying lunch for the team, do it for goodwill — not for Uncle Sam’s approval. And if you’d like help structuring your accounting categories or exploring better employee benefit strategies, reach out to your Linkenheimer CPA.