Industry News | July 28, 2009

U.S. Rep. Proposes to Increase Business Meal Tax Deduction

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U.S. Representative Neil Abercrombie (D-Hawaii) introduced legislation that would increase the federal tax deduction for business meals from 50 percent to 80 percent. The measure would make changes in the tax code for legitimate business deductions and help local restaurants and small businesses.

“On behalf of restaurant owners and operators throughout the country the National Restaurant Association strongly supports this legislation which would help restore, sustain, and create jobs and provide a tremendous boost to the economy,” says Dawn Sweeney, president and CEO of the National Restaurant Association (NRA). “We—and the many restaurant employees who have seen their income reduced in these challenging economic times—applaud Congressman Abercrombie for his leadership and urge Congress to pass this important measure.”

According to research conducted by the NRA, the restaurant industry continues to be a driver for the U.S. economy, with overall economic impact expected to exceed $1.5 trillion in 2009. An increase in the tax deduction for business meals to 80 percent would boost business meal sales by $6 billion a year and create an $18 billion increase to the overall economy. The industry currently employs an estimated 13 million people, or 9 percent of the U.S. workforce. It is estimated that for every additional $1 million in restaurant sales an additional 33 jobs are generated for the economy. “We believe that particularly during these difficult economic times, the cost of business meals should be treated fairly along with other allowed business deductions,” Sweeney says. “This legislation is an important step that will benefit local restaurants and businesses in communities throughout the nation.”

The NRA has long supported fully restoring the federal tax deduction for business meals since it was reduced to 50 percent in 1993. Restaurants, along with small businesses, self-employed individuals, and the travel and tourism industry are most negatively impacted by the current policy.

Restaurants are the number one preference for small business people who conduct meetings outside the office, and two-thirds of people who claim the business meal deduction are small business owners who rely on the deduction to grow their businesses and stay competitive.

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