Can an Employee Deduct Travel Expenses for Work?

Navigating the rules for deducting work-related travel expenses can be complex for employees. For most individuals, the ability to deduct these costs on federal income tax returns has changed significantly. While a general federal rule applies to the majority of employees, specific exceptions exist for certain professions. State tax laws may also have different provisions regarding these deductions.

Current Federal Rules

The Tax Cuts and Jobs Act (TCJA) of 2017 suspended the deduction for unreimbursed employee business expenses. Before this legislation, employees could deduct these expenses as a miscellaneous itemized deduction. The TCJA eliminated this deduction for most W-2 employees from 2018 through 2025. This suspension means that typical employees who pay for work-related travel out-of-pocket and are not reimbursed by their employer cannot claim these expenses on their federal income tax return. This applies even if the expenses are ordinary and necessary for their job. This change effectively broadened the tax base by removing a common deduction for a large segment of the workforce. The suspension is set to expire after 2025, but currently, most employees cannot reduce their taxable income with these costs. This emphasizes employer reimbursement policies for work-related travel.

Defining Deductible Travel Expenses

When deductible, travel expenses are ordinary and necessary costs incurred while traveling away from one’s tax home for business. An expense is ordinary if it is common and accepted in an industry, and necessary if it is helpful and appropriate for the business. The IRS defines “travel away from home” as requiring an overnight stay, meaning duties necessitate being away from one’s tax home for a period longer than an ordinary workday.

Qualifying travel expenses include:
Transportation costs such as airfare, train tickets, bus fare, or personal car use. For personal vehicle use, individuals can deduct either the standard mileage rate or actual expenses, including gas, oil, repairs, and depreciation. Parking fees and tolls are also deductible.
Lodging expenses, such as hotel or Airbnb costs.
Meals incurred while traveling for business, generally subject to a 50% deduction limit.
Other expenses like dry cleaning, laundry, and business calls.

Categories of Employees Who Can Deduct

Despite the general federal rule, specific categories of employees can still deduct certain unreimbursed work-related travel expenses.

Statutory Employees

These individuals are independent contractors under common law but are treated as employees for specific tax withholding purposes. They receive a W-2 form with Box 13 checked, indicating their statutory employee status. They can deduct their work-related expenses, including travel.

Armed Forces Reservists

Reservists can deduct unreimbursed travel expenses if their duties require them to travel more than 100 miles away from home and stay overnight. These expenses are limited to federal per diem rates for lodging and meals, and the standard mileage rate for car expenses.

Qualified Performing Artists

These artists can deduct expenses incurred in their performing arts employment. To qualify, they must meet specific income and expense thresholds: at least two employers in the performing arts paying at least $200 each, business expenses exceeding 10% of their gross income from performing arts activities, and an adjusted gross income of $16,000 or less.

Fee-Basis State or Local Government Officials

Officials compensated on a fee basis for their services can deduct business expenses. This applies to officials who administer or enforce public laws and receive fees directly from the public.

Active-Duty Military Members

Certain active-duty military members can deduct unreimbursed moving expenses if their move is due to a military order and a permanent change of station. This deduction applies to costs like moving household goods, personal effects, and travel expenses (excluding meals) to the new duty station.

Documentation and Recordkeeping

Maintaining thorough and accurate records is essential for substantiation. The IRS requires adequate records to support deductions, especially for those who fall under an exception or require employer reimbursement. Without proper documentation, claimed deductions may be disallowed.

Key records include:
Receipts, invoices, and other supporting documents for each expense, detailing the amount, date, and place.
For travel, documentation should also include the dates of departure and return, the number of days spent on business, and the destination (city or town).
A clear business purpose for each expense is also required, explaining how the travel or expense relates to business activities.

For vehicle use, a mileage log detailing business miles, dates, destinations, and the business purpose of each trip is important. If using per diem rates for meals and lodging, records of dates and locations are necessary. Contemporaneous recordkeeping, documenting expenses at or near the time they occur, is recommended to ensure accuracy. These records are important for compliance and in case of a tax inquiry or audit.

How to Claim Deductions

For the limited categories of employees who qualify to deduct travel expenses, the method of claiming these deductions depends on their specific classification. They use particular forms and processes to report their eligible expenses on their federal income tax return.

Statutory employees report their income and business expenses, including travel, on Schedule C (Form 1040), Profit or Loss From Business.
Armed Forces reservists, qualified performing artists, and fee-basis state or local government officials generally use Form 2106, Employee Business Expenses, to calculate their deductible unreimbursed expenses. The calculated amount from Form 2106 is then typically reported on Schedule 1 (Form 1040), Additional Income and Adjustments to Income, as an adjustment to income. This “above-the-line” deduction reduces their adjusted gross income, which can be advantageous as it does not require itemizing deductions on Schedule A.
Active-duty military members deducting moving expenses due to a permanent change of station use Form 3903, Moving Expenses, with the deductible amount also flowing to Schedule 1 (Form 1040).