Jan 14, 2018

Entertainment and Employee Perks Take a Hit Under the Tax Cuts and Jobs Act

News outlets far and wide are singing the praises of the many ways that Trump’s tax cut will help small businesses. But one overlooked downside to the Tax Cuts and Jobs Act is Section 3307, the elimination of the 50% deduction for business-related entertainment.

Business owners will no longer be able to deduct expenses for any “activity generally considered to be entertainment, amusement or recreation.” This includes the costs of sporting events, concerts, plays and other ways that businesses commonly choose to entertain clients or reward employees.

Industries that often secure deals by wooing clients – such as finance, investment, and lobbying firms – are expected to feel the most impact, and will likely reduce entertainment-related spending this year.

Employees may also see a reduction in benefits, as the tax act is putting the squeeze on the ability to write off employee perks. Employers will no longer be able to deduct payment of membership dues, nor will they receive credits for providing employees with childcare (Sec. 3402) or on-premises parking (Sec. 3308) and athletic facilities (Sec. 3308). The 100% deduction for meals provided to employees is also being reduced to just 50%.

Applying is free and it won't impact your credit

About the author

Melissa Zehner
Melissa Zehner is a writer and editor specializing in small business and finance. She's written for wealth management organizations, venture capital firms, credit unions, and more than 40 small businesses. Melissa currently serves as Small Business Finance Editor at Lendio. When she's not playing wordsmith, you can find her reading, cooking, or hiking with her dog Spencer.

Quickly Compare Loan Offers from Multiple Lenders

Compare Offers
from 75+ Lenders

Applying is free and won’t impact your credit
Talk to a rep at (855) 853-6346

Mon–Fri | 7:30am–5pm MST