Business Travel Deductions: What You Can and Can’t Write Off

Traveling for business? Don’t leave money on the table. Understanding the current rules for deducting out-of-town business expenses is key to making the most of your tax benefits.

Here’s what you need to know before your next trip.

Who Can Deduct Travel Expenses

The rules on who qualifies depend on how you’re paid.

• Self-employed individuals and business owners can deduct ordinary and necessary business travel expenses on Schedule C.
• W-2 employees are in a different position. The deduction for unreimbursed employee business expenses, suspended since 2018 under the Tax Cuts and Jobs Act, was permanently eliminated by the One Big Beautiful Bill Act, signed into law in July 2025. For most employees, these expenses are no longer deductible on federal returns.
  

If you’re a W-2 employee who travels for work, talk to your employer about reimbursement. When an employer reimburses travel costs under a qualifying IRS plan, those payments are not included in the employee’s taxable income, meaning no tax on either side.

The “Away from Home” Requirement

To qualify for a deduction, your trip must meet two criteria:

1. It must take you outside the general area of your tax home, which is your principal place of business.
2. It must be long enough to require stopping for sleep or rest to do the work.
   

Day trips typically do not qualify. Overnight stays typically do.

One important limit: if a work assignment is expected to last, or actually lasts, more than one year, the IRS considers it “indefinite.” Travel expenses to that location are not deductible once the assignment becomes indefinite.

What You Can Deduct

If you meet the away from home standard, deductible expenses generally include:

• Transportation: Airfare, train, bus fare, and the cost of shipping baggage
• Local travel: Taxis, rideshares, and public transit to and from meetings, airports, and hotels
• Vehicle use: If you drive your own car, you may use the IRS standard mileage rate or actual expenses, plus parking and tolls
• Lodging: Hotel or rental costs for the business portion of the trip
• Incidentals: Tips for baggage carriers, laundry, dry cleaning, and business-related calls or communications
  

Rules for Meals

Meals while traveling are generally deductible, but only at 50% of the cost.

• The IRS disallows deductions for meals that are “lavish or extravagant,” interpreted to mean unreasonable for the circumstances.
• You must keep records showing the date, location, amount, and business purpose of each meal.
  

Combining Business and Personal Travel

Some trips blend work and vacation, nicknamed bleisure. The IRS requires you to allocate costs when that happens.

Transportation: If the trip is primarily business, meaning more days are spent on work than on personal activities, the full cost of your flight or other primary transportation is deductible.

Daily expenses: Meals and lodging are only deductible for the days you were actually conducting business. You cannot deduct costs incurred on personal vacation days.

Conferences and training: The IRS looks closely at travel for seminars and conventions to confirm they are not personal trips in disguise. Keep agendas, session materials, and meeting notes.

What Is Not Deductible

A few common situations where deductions do not apply:

• Spouse or family travel: No deduction is allowed for a spouse or family member accompanying you unless they are also an employee of your business with a legitimate, documented business reason for the trip.
• Home expenses while traveling: Costs like pet boarding or house-sitting are personal and cannot be deducted, even if the trip made them necessary.
  

Documentation: Your Best Defense

The IRS expects substantiation for travel deductions. Keep an organized log of your trips, including:

• Copies of conference agendas and meeting notes
• Itemized receipts for all expenses
• Records of the date, location, and business purpose of each cost
  

A clear audit trail is what keeps a legitimate deduction from being challenged.

Questions about how these rules apply to your situation? Contact Smith Patrick CPAs to talk through the specifics.