What’s Still Allowed (and What’s Not)
Since the Tax Cuts and Jobs Act (TCJA) took effect in 2018, the IRS no longer allows deductions for most entertainment, amusement, or recreation expenses—even when they’re tied to business activities.
🎟️ That means front row concert tickets, golf outings with clients, or box seats at the big game are no longer deductible business expenses, even if work-related discussions are involved. Prior to 2018, those types of expenses were 50% deductible, provided you maintained proper documentation. Today, they’re fully disallowed.
Why the change? The IRS wanted to eliminate the gray area around what qualifies as a business-related entertainment expense. This makes compliance clearer—and stricter.
What You Can Still Deduct:
✅ Employee Rewards (as Compensation)
If you reward an employee with a trip or entertainment experience, it may still be deductible—as long as it’s treated as compensation and reported on their W-2.
✅ Independent Contractors
If you reward a contractor, the expense may be deductible if you issue a Form 1099-NEC (formerly 1099-MISC) for the value of the benefit.
✅ Employee Events
Celebrations like office holiday parties or company picnics remain 100% deductible, as long as they primarily benefit employees and not owners or high-level executives exclusively.
🚫 Still Not Deductible:
- Any club organized for business, pleasure, or social purposes
- Golf or athletic club dues
- Tickets to sporting events for client entertainment
- Recreational facility expenses
