Beginning in 2026, new federal tax rules will change how businesses deduct travel, meals, and entertainment expenses. While some deductions remain unchanged, others especially employer-provided meals, will be reduced or eliminated entirely. For many business owners, the biggest impact won’t be the tax law itself. It will be whether their accounting systems are set up to track these expenses correctly.
If your books currently lump all meals into one account and all travel into another, there’s a good chance deductions could be missed or incorrectly claimed under the new rules.
What’s Changing in 2026
Historically, most business meals were subject to a simple 50% limitation. That simplicity is going away.
Starting in 2026:
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Some meals remain 50% deductible
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Some meals are still 100% deductible
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Certain meals such as employer-provided convenience meals become completely non-deductible
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Travel expenses also fall into different deductibility categories
This means how expenses are categorized matters more than ever.
Why Your Chart of Accounts Matters
At tax time, deductions are only as good as the data behind them.
When expenses are combined into broad categories:
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Accountants are forced to estimate
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Conservative assumptions may reduce legitimate deductions
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Misclassification can increase audit risk
A properly structured chart of accounts allows expenses to be tracked correctly throughout the year rather than sorted out after the fact.
Recommended Chart of Accounts for Travel & Meals
To track deductibility accurately under the new rules, we recommend separating meals and travel into the following categories:
| Account Name | Deductibility | Common Examples |
|---|---|---|
| Meals – 100% Deductible | 100% | Company holiday parties and picnics, employee social events for the broader team, meals treated as taxable compensation, meals sold at fair market value |
| Meals – 50% Deductible | 50% | Client and prospect meals with documented business discussion, meals while traveling for business, team meals where business is conducted |
| Meals – Non-Deductible | 0% | On-site meals for employer convenience (cafeteria, breakroom snacks, overtime meals), meals without documented business purpose, lavish or extravagant meals |
| Travel – 100% Deductible | 100% | Airfare, lodging, car rentals, rail tickets, taxis and rideshare, per diem within federal limits for legitimate business travel |
| Travel – 50% Deductible | 50% | Transportation to and from business meals (the meal itself is recorded under a meals account) |
| Travel – Non-Deductible | 0% | Investment seminars unrelated to your business, educational travel where the travel itself is the education, personal portions of mixed-purpose trips |
Documentation Is Just as Important as Categorization
Even properly categorized expenses can be disallowed if documentation is incomplete.
For travel and meal expenses, the IRS requires records that show:
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The amount (itemized)
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Date and location
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Business purpose
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Who attended and their business relationship
Credit card statements alone are not sufficient. Documentation should be captured at or near the time of the expense—not reconstructed months later.
What Business Owners Should Do Now
You don’t need to overhaul everything overnight, but preparing ahead of 2026 can prevent last-minute cleanup and lost deductions.
We recommend:
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Reviewing your chart of accounts before year-end
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Updating expense reimbursement and documentation policies
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Training employees on how to code and document expenses properly
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Reviewing expense reports periodically, not just at tax time
These changes often improve financial clarity, not just tax outcomes.
How We Can Help
Every business is different. Some may need minor adjustments; others may benefit from a more structured expense-tracking process. If you’d like help reviewing your current setup or understanding how these changes apply to your business, we’re happy to help you plan ahead.
