Key takeaways
- T&E usually covers transportation, lodging, meals, incidentals, client hospitality and conference costs.
- Since 2018, entertainment, amusement and recreation are not deductible, even with a business discussion, per IRS Publication 463.
- Client meals and travel meals are generally 50% deductible. Parties and picnics for all employees can be 100% deductible.
- Business gifts are deductible up to $25 per recipient per year.
What is T&E?
T&E stands for travel and entertainment. It’s the budget line many businesses use for the cost of being on the road and hosting clients: flights, hotels, meals, client dinners and the occasional event. Larger companies have a T&E policy and often a corporate card just for it. Small businesses and freelancers rarely call it T&E, but they spend on the same things.
The name is a bit out of date. It comes from a time when entertaining clients was a normal tax deduction. Today, the travel half is still largely deductible, and the entertainment half mostly isn’t. The label stuck, and that causes confusion at tax time.
Track travel and entertainment spend from your phone with the Manage Receipt app.
T&E categories
| Category | Examples | Federal tax treatment |
|---|---|---|
| Transportation | Flights, trains, rental cars, ride-share, mileage | Deductible |
| Lodging | Hotels, short-term rentals, lodging taxes | Deductible |
| Travel meals | Meals on an overnight business trip | 50% |
| Client meals | Lunch with a prospect, dinner with a supplier | 50% |
| Incidentals | Tips to porters and hotel housekeeping | Deductible |
| Conferences | Registration fees, trade show booths | Deductible |
| Client gifts | A gift basket for a referral partner | Up to $25 each |
| Employee events | Holiday party, team picnic for all staff | Generally 100% |
| Entertainment | Game tickets, golf, concerts, club dues | Not deductible |
The first five rows are covered in more detail under travel expenses and the meal expense deduction.
Entertainment deduction rules
The 2017 tax law removed the deduction for entertainment, amusement and recreation starting in 2018. It doesn’t matter whether you closed a deal at the game or talked business the whole round of golf. Tickets, greens fees, concerts, hunting trips and club memberships are not deductible.
A few things still survive:
- Food at an event, billed separately. If food and drinks are bought separately or shown as their own amount on the invoice, they’re a 50% meal.
- Events mainly for employees. A holiday party or summer picnic open to all staff is generally 100% deductible.
- Entertainment treated as pay. If you report the value as an employee’s taxable wages, the business can deduct it.
You take a client to dinner ($180) and then to a basketball game ($240 for two tickets). You spent $420, but only the dinner is a deductible meal: $180 × 50% = $90. The tickets are entertainment, so $0. Record them separately so the dinner doesn’t get lost with the tickets.
T&E policy basics
Even a two-person business benefits from a written T&E policy. It keeps spending predictable and makes reimbursements tax-free under an accountable plan. A basic expense policy covers:
- Who can book travel and what needs approval first
- Nightly hotel and daily meal limits, or a per diem rate
- Airfare class and rental car size
- Which receipts are required (all lodging, anything $75 or more)
- What to note for client meals: attendees and business purpose
- How entertainment is handled and budgeted
- Deadlines: substantiate within 60 days and return any excess advance within 120 days
How to track T&E
- BeforeGet approval and note the trip or client event name.
- DuringScan every receipt right away and add who attended and why.
- AfterSubmit one expense report per trip or event with receipts attached.
- Tax timeSplit meals from entertainment so each gets the right treatment.
Grouping receipts by trip makes the expense report quick to build and easy to approve. It also helps at tax time: when every receipt is already tagged as lodging, meals or entertainment, you or your accountant can apply the right percentage to each group instead of sorting a year of slips in April.
A few habits make T&E tracking much easier for a small business:
- Use one card for business travel. Keeping trips off your personal card means fewer personal charges to strip out later.
- Ask for split bills. When food and tickets come from the same venue, ask for them on separate lines.
- Write the purpose on day one. A note like “trade show, booth 214” is easy to write at the time and hard to rebuild months later.
- Review monthly. A quick look at T&E spending each month shows where the budget actually goes.
Keep the dinner apart from the tickets
Manage Receipt groups receipts by trip or client event and sorts them into categories such as lodging, meals and entertainment. When the AI tax report runs, deductible meals sit apart from non-deductible entertainment, so a mixed client night is claimed at the right rate.
Explore AI Expense ReportsFrequently asked questions
Is entertainment still deductible?
No, not for most businesses. Since 2018, entertainment, amusement and recreation, such as event tickets, golf and club dues, are not deductible even if you discuss business. Food bought separately at an event is still 50% deductible, and parties for all employees are generally fully deductible.
What is included in T&E?
T&E usually includes airfare, trains, rental cars, ride-share, lodging, meals on trips, client meals, incidentals like tips to hotel staff, conference fees and client hospitality. Each item still follows its own tax rule: travel is deductible, most meals are 50%, and entertainment is not deductible.
What is the difference between T&E and travel expense?
Travel expense is a tax term for costs of business trips away from your tax home overnight. T&E is a broader budget category that also includes local client meals, gifts and entertainment. All travel expenses are T&E, but not all T&E is a travel expense, or even deductible.
Are client gifts part of T&E?
Many businesses track them under T&E. For taxes, you can deduct business gifts of up to $25 per recipient per year. Incidental costs like engraving, packaging or shipping don’t count toward that limit. Keep the receipt and note who received the gift and why.