Here’s a scenario: Employees are working overtime at their accounting firm and break for dinner before resuming the last couple of hours of work. Their employer, Nick, reimburses them for their meals that evening, as thanks for working late. Can any amount of these employer-paid meals be deducted by the employer? Depends on whether the expense falls under §119 or §132(e)(1):

• Section 119: An employer cannot claim a deduction on any overtime meal/reimbursement provided at the employer’s convenience on the employer’s premises under §119(a).
• Section 132(e)(1): Overtime meals/reimbursements qualifying as de minimis fringe benefits can deduct 50% of their cost.

De minimis fringe means “any property or service the value of which is (after taking into account the frequency with which similar fringes are provided by the employer to the employer’s employees) so small as to make accounting for it unreasonable or administratively impracticable”. For overtime meals/reimbursements qualifying as de minimis fringe to remain 50% deductible under §132(e)(1), they must satisfy three requirements to qualify for excludability from the employee’s income in 2026:

1. Frequency: The overtime meals must be “occasional.” If the overtime meals are regular or routine, then this test will fail, and the meals will not be governed under §132.
2. Overtime: Meals must be provided because the overtime work requires an extension of the employees’ normal working hours. If the employees receive overtime meals when working 12-hour shifts and are required to work regular 12-hour shifts, then the meal cost cannot be excluded under §132.
3. Meal Money: Whether employer-paid or reimbursed, meal money must be provided to enable the employee to work overtime. There cannot be a fixed dollar amount per hour provided.

These rules can be found in Treas. Reg. §1.132-6(b) and (d)(2).