S‑Corp Office Snacks: De Minimis Fringe Benefits and Deductions

For S corporations, everyday office refreshments like donuts, soda, and coffee are generally treated as de minimis fringe benefits to employees and can be a valid business expense of the corporation. Two separate rules apply: (1) employee tax treatment (whether employees must include the benefit in wages) and (2) employer deduction (whether, and to what extent, the corporation can deduct the cost of the food and beverages). Core authorities include the de minimis fringe regulations, employer‑operated eating facility rules, the convenience‑of‑the‑employer rules for meals, and the general limitations on food and beverage deductibility in IRS guidance. See the IRS discussion of de minimis snacks and meals in Publication 463 and the de minimis fringe regulations and guidance (including the IRS de minimis page) for the foundational rules. Publication 463 26 CFR § 1.132-6 26 CFR § 1.132-1 De minimis fringe benefits (IRS)

Employee tax treatment: de minimis fringe benefits
Occasional, low‑value refreshments such as coffee, donuts, and soft drinks provided for employees are expressly identified as de minimis fringe benefits. Because of their small value and infrequent provision, these items are excluded from employees’ income—tracking them would be administratively impracticable. The regulations list “occasional theater or sporting event tickets; coffee, doughnuts, and soft drinks” as examples of de minimis fringes. 26 CFR § 1.132-6
The IRS further confirms that “occasional snacks, coffee, doughnuts, etc.” qualify as de minimis fringes; if the benefit is too large or too frequent, the entire value becomes taxable, and cash or cash equivalents (like general‑purpose gift cards) are not de minimis. De minimis fringe benefits (IRS)
For de minimis fringes, “employee” means any recipient of the fringe benefit, so the exclusion applies broadly to recipients of these minimal refreshments (including shareholder‑employees receiving the same hallway/breakroom snacks). 26 CFR § 1.132-1(b)(4)

If office refreshments are provided as cash or cash‑equivalent allowances—or are large/frequent enough to fail the de minimis test—they become taxable wages and must be reported and withheld accordingly; otherwise, no wage reporting is required. See the IRS de minimis page and IRS fringe benefit reporting guidance. De minimis fringe benefits (IRS) Publication 5137 (Fringe Benefit Guide)

Employer deduction of donuts, soda, coffee, and similar refreshments
In general, food and beverage costs that are ordinary and necessary business expenses are deductible, but subject to a percentage limitation unless an exception applies. IRS Publication 463 details when the 50% limitation applies and the exceptions (for example, certain items made available to the public, amounts treated as compensation, or recreational/social events). As a default, break‑room coffee and snacks provided to employees are treated as meals/refreshments subject to the general percentage limitation unless a specific exception applies. Publication 463

Exceptions that can allow a 100% deduction in limited cases

• Items made available primarily to the general public: If snacks and beverages are provided and primarily consumed by the general public (for example, in a public waiting area or open house where more than half of consumption is by nonemployees), IRS guidance recognizes that the usual percentage limitation may not apply. Review the exception framework and examples in Publication 463 when documenting any “primarily public” facts. Publication 463

• Employer‑operated eating facilities: On‑premises cafeterias can qualify as de minimis fringes to employees if, on an annual basis, revenue equals or exceeds direct operating costs and the facility is on or near the business premises, among other requirements. These rules primarily affect employee exclusion under section 132(e) and do not, by themselves, remove the employer deduction limitation; see the eating facility regulations for the specific “direct operating cost” and “on/near business premises” requirements. 26 CFR § 1.132-7

Important change for 2026 and later (planning note)
The IRS Employer’s Tax Guide to Fringe Benefits explains that for amounts incurred or paid after 2025, employers can no longer deduct expenses associated with providing food and beverages through an eating facility that meets the de minimis or convenience‑of‑the‑employer rules; the prior 50% deduction has been eliminated per statutory changes referenced there. Confirm current‑year applicability when filing, as this change affects meal deductions after 2025. Publication 15‑B (2026), What’s New—Employer’s meal deduction

Special points for S corporations
As with any employer, S corporations may treat occasional employee refreshments (donuts, coffee, soda) as de minimis fringe benefits excludable from employee wages if they meet the small‑value/infrequency standard. For shareholder‑employees, the de minimis snack exclusion generally applies because the de minimis employee definition covers “any recipient of a fringe benefit,” although separate fringe‑benefit rules do restrict certain exclusions for 2% S‑corp shareholders in other fringe areas (for example, some qualified transportation fringes). The de minimis regulations define “employee” broadly. 26 CFR § 1.132-6 26 CFR § 1.132-1

Cash equivalents and overtime meal money—when the exclusion fails
Cash, general‑merchandise gift cards, or cash equivalents provided for food are not de minimis and are taxable; include them in wages. A narrow exception exists for occasional overtime meal money or local transportation fare if all conditions are met (provided occasionally, necessitated by overtime, and provided to enable overtime work, among other rules). Meal money calculated per hour is not de minimis and is taxable. De minimis fringe benefits (IRS) 26 CFR § 1.132-6(d)(2)

Practical compliance: substantiation and reporting

• De minimis snacks require no wage reporting or withholding if they meet the small‑value/infrequency standard. De minimis fringe benefits (IRS)

• Treat break‑room snacks as a business food and beverage expense, typically subject to the general percentage limitation unless you clearly qualify for an exception (for example, primarily public consumption). Publication 463

• If an item fails the de minimis test (e.g., large frequent meals or cash equivalents), the value becomes taxable wages and should be included on Form W‑2 and subjected to income and employment tax withholding under fringe‑benefit reporting rules. Publication 5137 (Fringe Benefit Guide)

Summary

• Employee tax treatment: Occasional donuts, soda, and coffee provided in the office generally qualify as de minimis fringe benefits and are excluded from employees’ income. 26 CFR § 1.132-6 De minimis fringe benefits (IRS)

• Employer deduction: The S corporation’s deduction for food and beverages is generally subject to a percentage limitation unless an exception applies (for example, primarily consumed by the general public). Break‑room snacks for employees are a percentage‑limited deduction by default. Publication 463

• After 2025, the employer meal deduction rules change for certain eating facilities—confirm current‑year law when filing. Publication 15‑B (2026)

By following the de minimis fringe rules for employees and the IRS limitations on employer meal deductions—and avoiding cash equivalents or frequent large provisions—an S corporation can treat office donuts, soda, and coffee as excludable employee fringe benefits and properly deduct the costs (subject to the applicable percentage limitation). 26 CFR § 1.132-6 De minimis fringe benefits (IRS) Publication 463 Publication 15‑B (2026) Publication 5137

This essay is not tax advice. Always consult a qualified tax professional for your specific situation.