Business travel expenses: How they work under the new tax laws
With the recent changes in the tax codes, we've had questions from many business owners concerned about which expenses can still be written off and in what fashion. One area of particular interest is how these changes are impacting travel and entertainment expenses. Here's a quick look at how the changes in tax laws impact how you deduct business travel expenses.
Let's start by looking at what's staying the same in business travel expenses. Even with the new tax laws, you can still deduct up to 50% of employee travel meals. Until 2025, you can still deduct 50% of meals that are provided for the convenience of employees, with the new tax laws doing away with the option of deducting 100% of the cost of these meals if they were considered de minimis fringe benefits.
One area that has seen strong change is the end of the entertainment expenses, which had been considered 50% deductible in the past for general entertainment expenses, including up to face value for event tickets. In the past, you could also deduct 100% of the cost of tickets to charitable events. However, with the new tax laws, all of these deductions have gone away.
How will these changes impact how we do business? Because of the change in the tax laws, there may be a related shift from entertaining clients at entertainment venues, such as theater, concerts or sporting events, which are no longer tax deductible, to entertaining clients at meals, which remains tax deductible.
If your business owns or is preparing to purchase a passenger vehicle, even luxury vehicles, the new tax laws have increased the amount of depreciation that can be claimed each year. Though these deprecations are lower if the vehicle isn't being used completely for business purposes, they're still much higher than prior years.
By having a solid grasp of how business travel expenses are impacted by the recent changes in tax laws, you can make sure that you're keeping your business' tax strategy current. If you need help with setting up a solid tax strategy for your business with the new tax laws, AccountRely can help. Please feel free to contact us today to get started and discover the AccountRely difference today.