What Dental Accountants Need to Know About Changes in the 2018 Meals and Entertainment Tax Deduction
As 2018 continues to move along full-steam ahead, now is the perfect time for dental accountants to start thinking about tax deductions a bit more seriously. One of the most important changes to occur this year regarding tax law has to do specifically with the “meals and entertainment” tax deduction that so many practices rely on for various reasons. Whether it be meeting with reps or sales agents over dinner to help secure reduced rates or anything similar, the meals and entertainment tax serves a very important purpose for businesses both small and large.
So, what exactly is different this year about the meals and entertainment tax deduction? Here’s everything you need to know in order to get ready for tax prep season.
Entertainment: How It’s Changed
In years past, 50% of anything qualifying as “entertainment” and applied to professional business relationships was capable of being utilized as a tax write-off. The entertainment in question had to be “directly related” to business, such as discussions for generating revenue, closing new sales etc. Many different forms of entertainment fell into this category, including sporting events, theater shows, country club outings and more. The new law, however, stipulates that this deduction is no longer allowed.
While some industries are affected by this change more than others, businesses across the board will need to learn to adjust to the new laws.
What About Meals?
With the old tax laws, business-related meals fell under two different general categorizations. The first would be meals with vendors, potential clients, sales reps and other individuals with the purpose of furthering the business in a way that generates additional revenue—a 50% deduction of the final cost of the meal. The other would be scenarios in which an employer buys a meal for more than half of their employees, such as breakfast for a morning meeting—a 100% write-off.
With the new law, both of these types of business-related meals are subject to a 50% tax deduction, which means the employer-sponsored meal mentioned above is no longer a 100% write-off. As of January 1st, 2026, neither of these expenses will be deductible.
The Bottom Line
The changes listed above come as a relatively big surprise to many people—especially accountants who are trying to figure out how to adjust practices that have been in place for many years. While entertainment deductions may have been nixed completely at this point, however, meal-related business expenses can still be utilized by dental practices of all sizes.
Now’s the time to think about the future, however, as when 2026 rolls around, everything will change once again.
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