• COVID-19 relief bill includes provisions for business meal deductions
  • Will this revive the restaurant industry or will it hurt the corporate tax rate?

With the release of the newest coronavirus relief bill came a revival of old favorites from 2020—the CARES Act’s PPP loan and stimulus checks to name a few—as well as some really old favorites from the 80s. The “Three Martini Lunch” tax deduction allowing businesses to deduct 50% cost of business meals from corporate tax returns has just been upped to a full 100% deduction. The new provision will stay in place until mid-2022.

The idea was proposed by Senator Tim Scott (R-SC) who hoped it would help revive the currently struggling economy of the restaurant industry. The legislation, he said, is “pro-worker, pro-restaurant, and pro-small business bill will lead to increased spending in restaurants and more income for staff.”

Senate Republicans bartered with the left, who agreed to the provision in exchange for added language in the bill that would give tax credits to low-income earners.

Trump gave his seal of approval, saying that the deduction is perhaps not an immediate relief but will serve the restaurant industry well in the long-run: “I think it’s, frankly, more important than even the other things we’re talking about,” the president said of restoring the deduction. “I guess, short term, what you’re talking about, is more important, but long-term, the deduction would be phenomenal.”

Opponents have a multitude of concerns, other than the obvious that this can lead to larger crowds at restaurants and potential spread of the virus. Those opposing feel that the deduction will do little to actually aid restaurants but will directly benefit business executives enjoying free “martini” lunches (hence its namesake). Tax analysts are concerned that too many special provisions will throw the 2017 corporate tax rate in jeopardy. It seems unlikely a 21% corporate tax rate will prevail in tandem with increased generous tax codes

The cost to taxpayers of the proposal is unclear but not expected to exceed $6 billion.

Stay up to date with news, announcements, and updates on our DSJCPA COVID-19 Information Center and call our offices at 516-541-6549 to speak with a member of our Coronavirus Response Team (CRT).


Devin McQuillan
Associate, Creative Solutions

516-541-6549 | Email

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