In a nutshell, the ordinary and necessary test should give you no trouble in meeting this standard for your client, prospect, consultant, and similar business contact business meal tax deductions. The law does not define “lavish” or “extravagant,” and no court cases have applied the concept to deny business meal costs.

The IRS does not provide a specific dollar amount to define a "lavish or extravagant" meal; instead, it uses a "facts and circumstances" test based on what is considered ordinary and necessary for your specific business or profession. A meal is considered lavish if it is significantly more expensive than what would be reasonable under the circumstances of your business trip or client meeting. For example, a $500 dinner for two might be considered "ordinary" for a high-stakes corporate merger negotiation in New York City, but the same meal could be viewed as "extravagant" for a routine check-in with a local vendor in a small town. The key is that the deduction (which is generally limited to 50% for business meals) is only allowed for the "non-extravagant" portion of the expense. In 2026, the IRS continues to emphasize that business meals must not be "personal" in nature; if a meal is deemed excessive, the IRS may disallow the entire deduction or reclassify it as taxable income to the recipient, making meticulous record-keeping of the business purpose and attendees essential for every high-end dining expense.