All food, including bottled water, has an expiration date. Because owners of restaurants, grocery stores, and convenience stores spend up to 30% of their annual budgets on food, they are always in a race against time to sell their inventory before it expires. Learn how much they stand to lose by throwing food away and whether there is a food spoilage tax deduction they can claim.
There is no special tax deduction for spoiled or expired food. Deductions are rather based on the total cost of food purchased in the first place. The ultimate destination of the food and the amount for which it is sold does not affect this credit. Donating–rather than tossing–the food, however, does affect the tax rate.
A business that donates food before it expires can deduct the value of the food’s selling price. In this way, C-corporations can deduct up to 10% of their taxable income, and other businesses can deduct up to 30%. The Protecting Americans from Tax Hikes Act of 2015 allows all businesses, including C-corporations, to deduct up to 15% of their taxable income if their donations meet certain criteria. They are allowed to deduct either two times the value of the food or its value plus half its profit margin.