Beginning in 2026, businesses may see higher costs tied to a common workplace perk: providing coffee, snacks, and small refreshments for employees.

For years, these items were considered de minimis fringe benefits under the tax code. Employees could enjoy them tax-free, while employers were generally allowed to deduct a portion of the expense. However, under changes introduced by the Tax Cuts and Jobs Act, that deduction is being fully eliminated.

Through 2025, employers could still deduct 50% of qualifying break-room refreshment expenses. Starting in 2026, the deduction drops to 0%, meaning businesses will absorb the full after-tax cost of providing these items.

Although this may appear to be a minor change, it can impact operating expenses over time, particularly for businesses with larger teams or multiple office locations. Many employers offer refreshments to encourage collaboration, improve morale, and create a more productive workplace environment.

To prepare for this change, business owners should:

• Review current spending on employee refreshments

• Evaluate the increased after-tax cost beginning in 2026

• Determine whether these workplace benefits continue to provide value

• Update bookkeeping practices to properly classify non-deductible expenses

• Proactive tax planning can help reduce surprises and improve budgeting decisions.

If you have questions about how this change could affect your business, contact Pricewise Business Solutions at 720.949.7733. Our team can help you evaluate the financial impact and identify strategies to keep your business tax-efficient.