Food for Thought: Feeding Employees May Become a Costly Benefit to Restaurant Owners

There is a change in the new tax law that has been under the radar but can be significant for the restaurant industry. Food and beverages provided to employees through an eating facility operated by the employer that is located on or near the employer’s business premises are considered a de minimis fringe benefit and is excludable from an employee’s gross income and wages for employment tax purposes.

Limitations to ExpensesStaff meals at restaurants would qualify as a de minimis fringe benefit. Up until now, there was an exception to the 50 percent limitation on the deduction of meals when the expense for food and beverages was considered a de minimis fringe benefit. This was fully deductible by the employer but all of this has now changed. For amounts incurred and paid after December 31, 2017, and until December 31, 2025, the new law expands the 50 percent limitation to expenses of the employer associated with providing food and beverages to employees through an eating facility…