Prepare for New Change to Meals Deduction for Restaurants in 2026
If you run a restaurant, bar, or brewery, you already know that feeding people is part of what you do. Staff meals, shift snacks, tasting new dishes, and catching up with partners over a quick bite often feel like a natural part of the job. For years, many of these meal-related costs could be deducted on your tax return, which helped lower your overall tax bill.
Starting January 1, 2026, that is going to change. A new rule in the One Big Beautiful Bill Act (OBBBA) eliminates the deduction for most employer-provided meals. That means the shift meals you give your team, the snacks in the break room, and even the cost of running an on-site staff cafeteria will no longer reduce your taxable income.
This is a major shift for restaurants. While it does not affect the meals you sell to customers, it does affect many of the meals you provide internally. The earlier you prepare, the easier it will be to avoid surprises when tax season rolls around.
New 2026 Meals Deduction Rules for Restaurants: What Is Changing Under OBBBA
Under the OBBBA amendment, the IRS will no longer allow businesses to deduct the cost of employer-provided meals beginning January 1, 2026. Several situations fall into this category.
Meals that are no longer deductible include the following:
- Meals or snacks are provided for the convenience of the employer, such as shift meals or break room food.
- Meals are provided in an on-premises eating facility or staff cafeteria.
- Complimentary food and drink are provided to employees during the workday, unless it falls into a very narrow set of exceptions. These exceptions include small and infrequent de minimis items, meals required for safety or emergency reasons, or meals treated as taxable wages.
These changes finalize the phaseout that began years ago under the Tax Cuts and Jobs Act. For restaurants, the key takeaway is simple. If you are feeding your employees as part of running your business, those costs will not be deductible starting in 2026.
Staff meals are about to get more expensive from a tax perspective, and restaurants should start planning now.
Restaurant Meal Deductions That Still Qualify in 2026
The good news is that not everything is changing.
Business meals with a legitimate business purpose remain deductible at the standard 50%. If you meet with a vendor, investor, landlord, or advisor and there is a business discussion, those meals continue to qualify. The rules around documentation still apply, so keep receipts and make notes about the purpose of the meeting.
Meals you sell to customers are not affected at all. Food and beverages sold as part of your restaurant operations remain fully deductible as ordinary business expenses or cost of goods sold. This rule applies to all restaurants, breweries, taprooms, and bars.
Meals that are treated as taxable compensation to employees may still qualify for a deduction, but this requires proper payroll reporting and should be discussed with your CPA before making changes to how you treat staff meals.
How This Impacts Restaurants and Breweries
If you already provide meals to your staff, this change could affect your bottom line more than you expect. Many operators offer shift meals as part of their culture, and some provide snacks or beverages to help support long shifts. Under the new rules, those everyday perks no longer reduce taxable income.
Restaurants that run a small staff cafeteria or prepare family meals during pre-shift meetings may need to rethink how these costs are handled. Even simple items like fruit, granola bars, or coffee provided to the team may need to be reclassified for tax purposes.
This does not mean you must take these benefits away. It simply means you should understand the tax impact and decide whether the perk is still worth offering or whether a different benefit might make more sense.
What Restaurants Should Do Now to Prepare for the 2026 Meal Deduction Change
A few thoughtful adjustments now can help your business stay compliant and avoid losing deductions unintentionally.
1. Review All Meal-Related Spending
Take inventory of every type of meal you provide. Identify what a business meal is, what a staff meal, and what is part of your customer service. Many restaurants do not realize how large their staff meal budget really is until they dig into the numbers.
2. Update Your Chart of Accounts
Make sure your bookkeeping system separates business meals from staff meals. Clear categories make year-end reporting smoother and help your CPA apply the correct treatment when preparing your tax return.
3. Forecast the Tax Impact
Look at how much you currently spend on shift meals, snacks, testing portions, or team food. When these amounts become non-deductible, your taxable income increases. Understanding the numbers now can help you plan for 2026 pricing, labor budgets, and cash flow.
4. Evaluate Whether to Adjust Staff Perks
Some restaurants may continue offering free meals because it helps with morale and retention. Others may switch to discounted meals or different types of benefits. The right choice depends on your culture, labor market, and budget.
5. Keep Stronger Records for Business Meals
Since the distinction between business meals and staff meals becomes more important under OBBBA, make sure every business meeting is documented with who attended and why it was a business discussion.
6. Meet With a Restaurant-Focused CPA
These rules are detailed, and the impact varies widely from one restaurant to another. A CPA who works with restaurants can help you estimate the cost, revise your internal policies, and set up your books correctly for 2026.
Plan Your 2026 Restaurant Budget & Tax Strategy With U-Nique Accounting
Meal deductions may feel like a small detail, but as many restaurant owners know, small details add up fast. Understanding the new rules before they arrive helps you protect your margins, plan staffing policies, and avoid unpleasant surprises at tax time.
If you want a professional review of your meal policies or help modeling how the 2026 rules will impact your restaurant, the team at U-Nique Accounting is here to help.
We work with restaurants, breweries, and bars every day, and we will make sure your books and your tax strategy are set up correctly for the year ahead.
By MATT CIANCIARULO
