The Great Snackpocalypse: What Businesses Need to Know About the Tax Deduction Phase-Out

The modern workplace has changed dramatically in recent decades. Open floor plans, flexible schedules, and yes - free snacks - have become staples of office culture. In fact, 44% of U.S. employers now provide complimentary snacks to their employees, up from just 22% ten years ago. Not that anyone has built their entire career around the promise of complimentary granola bars…but they’ve certainly helped ease the afternoon slump. But a quiet provision in President Donald Trump’s “big beautiful bill” signed into law on July 4, 2025, has effectively declared war on workplace snacks. Hold onto your kombucha, because this could affect both your bottom line and your employee retention strategies.

As of January 1, 2026, the long-standing tax deduction for food and beverages provided to employees at the workplace is set to expire. You might be thinking, “Who cares?” But the IRS sure does. Eliminating the deduction is expected to generate $32 billion in new tax revenue from employers through 2034, according to the Joint Committee on Taxation. That’s a lot of money that could’ve been spent on Starbucks runs, pizza parties, and Costco-sized peanut butter pretzels. This shift has flown under the radar for many business owners, but it could have real implications for your business operations, budget planning, and company culture.

A Brief Overview of the Tax Deduction

Historically, the IRS allowed businesses to deduct 100% of the cost of meals provided for the “convenience of the employer” (think in-office snacks, meals during meetings, or food for employees working overtime). The 2017 Tax Cuts and Jobs Act temporarily reduced that deduction to 50%, and now, under the 2025 law, the deduction will be eliminated entirely starting in 2026.

Why It Matters

Many businesses have embraced the idea of providing snacks and meals as a relatively low-cost way to boost morale, improve productivity, and foster team bonding. Some companies have practically become snack utopias with mini fridges stocked like corner stores and endless bowls of individually wrapped motivation. But those perks can add up fast. And without the ability to deduct those costs as a business expense, some employers may be forced to reconsider those offerings. You might have to make some tough choices. Like, say, replacing the organic kale chips with - shudder - generic brand pretzels. Or cutting back on catered lunches for meetings (that could’ve been an email anyway.)

Here’s what’s at stake:

Higher Taxes

If you can no longer deduct the cost of snacks or meals, your taxable income may increase, resulting in a larger tax bill.

Morale Meltdown

In today's competitive job market, perks like free food can be a major draw. Eliminating them might not just affect morale; it could also make it harder to keep your edge in hiring.

Operational Adjustments

Employers may look for ways to reclassify expenses, shift budgets, or offer alternative benefits that retain value for employees but offer different tax advantages.

What Business Owners Should Consider Now

Now is the time for proactive business planning. At Fiffik Law Group, our business law team is already helping clients evaluate how this change fits into their broader strategic and financial goals.

Here are a few steps to consider:

Assess Your Current Spending

Take inventory of what you're offering in terms of meals, snacks, and refreshments, and how much you're currently deducting for those expenses.

Talk to Your CPA or Financial Advisor

Your tax professional can help you model what your liability will look like once the deduction is eliminated and identify areas where you may be able to shift costs or recover value.

Explore Alternative Benefits

Consider whether there are other fringe benefits that might better align with your culture and goals such as wellness stipends, transportation assistance, or professional development budgets.

Revisit Employee Policies and Handbooks

If meals or food-related perks are listed as part of your employee benefits, you may need to revise those materials to reflect changes ahead.

The Bigger Picture

This upcoming change is a reminder that tax law isn’t just about April 15th; it’s about how businesses plan, grow, and operate every day. What might seem like a minor adjustment to the tax code can have ripple effects across your company’s culture, budget, and strategy.

And while this may not be the total “snackpocalypse,” whether your business offers snacks as a small gesture of appreciation or as a core part of your employee engagement strategy, it’s important to understand how the loss of this deduction could affect your operations.

Need help planning for 2026?

Our business attorneys are here to guide you through tax-smart strategies and compliance updates that protect your bottom line. Contact us today or call 412-391-1014 to schedule a consultation.