What Is Considered a Business Travel Expense?

Business travel expenses are the costs incurred when traveling for work purposes. To be deductible for tax purposes, these expenses must be both “ordinary and necessary.” An ordinary expense is one that is common in your specific industry, while a necessary expense is helpful and appropriate for your business. The Internal Revenue Service (IRS) does not require an expense to be indispensable to be considered necessary.

These deductions are available to self-employed individuals and small business owners. Due to changes in tax law, employees cannot deduct unreimbursed business travel expenses, though businesses can still deduct these costs when they reimburse their employees. The key is that costs must be reasonable and not lavish, extravagant, or for personal benefit.

Defining “Away From Home” for Business Travel

To deduct travel expenses, the IRS requires you to be traveling “away from home.” This term refers to your “tax home,” which is the entire city or general area of your main place of business, regardless of where you live. The costs of a daily commute between your home and primary workplace are not considered business travel and are not deductible.

A trip qualifies as being away from home if it is long enough to require you to stop for sleep or rest to properly perform your duties. This is known as the “sleep or rest” rule. A trip that allows you to return the same day does not meet this requirement, even if it covers a significant distance.

The duration of a work assignment also affects your tax home. If you are temporarily assigned to a new location, your travel expenses are deductible. A temporary assignment is one that is realistically expected to last for one year or less. If an assignment is expected to last for more than one year, it is considered indefinite, and that location becomes your new tax home, making travel expenses there non-deductible.

Deductible Transportation Costs

Transportation costs for getting to your business destination and moving around locally are fully deductible if the trip’s primary purpose is business. This includes the cost of travel by airplane, train, or bus. If you use a ticket obtained through a frequent traveler program, your deductible cost is zero since you did not incur an actual expense.

When using your personal vehicle, you have two options for deducting expenses: the standard mileage rate or the actual expense method. For 2025, the standard mileage rate for business travel is 70 cents per mile, and you can also deduct business-related parking fees and tolls. The actual expense method involves tracking all costs of operating your car, including gas, oil, repairs, insurance, and registration fees, and then calculating the business-use portion.

Local transportation costs at your destination are also deductible. This includes fares for taxis, ride-sharing services, or a rental car used to travel between the airport and your hotel, or from your hotel to a client’s office. If you rent a car, you can only deduct the business-use portion of the rental and associated costs like gasoline.

Deductible Lodging, Meals, and Incidentals

While traveling for business, the cost of your lodging is a deductible expense. This includes a hotel, motel, or other reasonable accommodation, but the cost cannot be lavish or extravagant. For example, choosing a luxury suite when a standard room would suffice might be disallowed.

The cost of meals while on business travel is also deductible, but you can only deduct 50% of the total cost. This 50% limit applies to the food, beverages, taxes, and tips associated with the meal. For instance, if you spend $100 on a business meal, you can only deduct $50.

Incidentals are minor expenses you may incur while traveling. The IRS allows for the deduction of costs such as tips paid to porters and baggage carriers, as well as laundry and dry cleaning services during your trip.

Rules for Combined Business and Personal Trips

Travel Within the United States

When a trip within the United States combines business and personal activities, deductibility depends on the trip’s primary purpose. If the main reason for your travel is business, you can deduct 100% of your transportation costs. However, you must allocate lodging and meal expenses between business and personal days, deducting only the costs for days spent on business activities.

The primary purpose is determined by comparing the number of business days to personal days. Travel days to and from the destination count as business days. For example, if you travel for five days, with three days in client meetings and two days sightseeing, the trip is primarily for business. In this case, your flight is fully deductible, but you could only deduct lodging and 50% of your meals for the three business days and your two travel days.

Travel Outside the United States

The rules for international travel are more strict. For a trip abroad that lasts for a week or less, you can deduct all your transportation costs if the primary purpose of the trip was business.

For international travel lasting more than a week, you must allocate your transportation costs between business and personal time. However, you do not have to allocate these costs if you spent less than 25% of your time on personal activities. For example, on a ten-day trip to London where you spend eight days on business and two on personal sightseeing, you can deduct the full cost of your airfare. If you spent six days on business and four on personal activities (40%), you would only be able to deduct 60% of your transportation costs.

Required Documentation and Recordkeeping

To claim deductions for business travel, you must maintain thorough and accurate records. The IRS requires contemporaneous documentation, meaning you should record your expenses as they happen or soon after. For each expense, your records must prove the amount, the date and place it was incurred, and the specific business purpose. Without this information, a deduction may be disallowed if your tax return is audited.

You should keep all receipts for lodging, regardless of the cost. For other expenses, you are required to keep receipts for any single expense of $75 or more. While a receipt is not required for smaller expenses, you must still record the necessary details in a log, which can be a physical notebook or a digital application.

A detailed log should include your travel dates, destinations, the business reason for the travel, and a breakdown of your daily costs, such as airfare, hotel bills, meals, and local transportation fares.