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There’s no such thing as a free snack

Not to harsh the office vibes, but those work snacks have tax implications. FERKHOVA/iStock/Getty Images Plus

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Some of the flushest Silicon Valley tech companies offer gourmet meals for workers — all free. But even more companies offer free snacks: granola bars, fruit, maybe even some hummus.

Writer Jamie Lauren Keiles has been researching the often creative ways employers can turn some of that free grub into actual meals, though some of the culinary concoctions aren’t exactly healthy. (One worker described combining free hard-boiled eggs, Doritos, mozzarella and jerky into some sort of lunch bowl.)

However, there’s a serious tax issue here. Employers can’t write off most meals they give to employees, but snacks are tax-deductible. That means someone has to figure out when a snack morphs into a meal. The following is an edited transcript of Keiles’ conversation with Marketplace Morning Report host David Brancaccio.

David Brancaccio: First of all, good ole’ American ingenuity — you found that clever workers have figured out how to turn free nibbles into meals?

Jamie Lauren Keiles: Yeah. So, I was working on a temporary contract at Vox, the website, and this was my first time working in an office. I’ve worked freelance for about five years, so when I got there, the biggest surprise to me was that I could eat as many snacks as I wanted every day and figured out a bunch of different ways to combine them. My colleague who sat across the desk, she was telling me how she sometimes makes a pizza with things from the office. So, she takes the free bread and then she puts either like some Sriracha — or if she has some tomatoes or pasta sauce, Babybel cheeses, those little wax-wrap cheeses — toasts it, and then puts a little bit of Parmesan cheese to make “work pizza,” she calls it.

Brancaccio: You’re talking to an Italian-American, here. I’m not sure that’s my idea of pizza. But look, here’s the Marketplace question: companies can deduct the cost of snacks, but there are limits on deducting the cost of meals for the staff?

Keiles: Yeah. So, employers are allowed to provide meals for their employees, but they can’t just give you free meals every day because that’s for the benefit of the employee, and is basically a form of income that would be taxable. But snacks, it turns out, fall into this third category of perks called de minimis fringe benefits, and these perks are basically what the IRS doesn’t tax because it’s too confusing to add them up. Employers can create a tax deduction for themselves by offering free snacks, which then makes their employees happier, but also they can write the cost of the snacks off on their taxes.

Brancaccio: And in the big federal tax overhaul last year, snacks got nailed?

Keiles: I mean, it’s sort of too soon to tell, but under the Tax Cuts and Jobs Act, now employers can only deduct half the cost of workplace snacks. And over the course of the next, I think, decade that is going to be phased out, so employers are going to pay more for them now.

Brancaccio: Back to the question of why companies do snacks at all. You mentioned workplace morale, but would it be cynical of me to suppose it’s because the boss doesn’t want the lost productivity if I ever leave the office for 12 minutes to get a bite?

Keiles: Yeah, I mean you see these places like Google where they give you everything at work — you can get a haircut, you can work out at the gym. I think there’s definitely an incentive to keep people at the office longer. I can’t speak for every employer, but if the motive is profit then it seems like you’d want to get as much as you can out of your employees.

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