Business Travel in the United States
Learn how the IRS treats expenses for business travel in the United States. Find answers to common questions below.
IRS Regulation §1.274-4 defines “within the United States” as follows:
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The term “United States” includes only the fifty states and the District of Columbia. (§1.274-4(a))
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Travel by automobile within the United States is travel between points within the U.S., even though en route to a destination outside the U.S. (§1.274-4(e)(2)(ii))
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If a taxpayer travels by private airplane, any trip or portion of a trip in which both the take-off and landing are in the U.S. is travel within the U.S. (even if part of the trip is over a foreign country). (§1.274-4(e)(2)(iii))
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If the travel is by bus, train, airline, or other public transportation, any place in the U.S. where that vehicle makes a scheduled stop to take on or discharge passengers is a point within the U.S. (§1.274-4(e)(2)(i))
Deductible U.S. Travel Expenses
Reg. 1.162-2) include:
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All ordinary and necessary travel expenses if a trip is entirely for business.
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If the travel is primarily for personal purposes, none of the expenses incurred in traveling to and from the business destination are deductible.
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If the trip is primarily for business and the taxpayer engages in some non business activity, travel expenses to and from the business destination are deductible in full. Regardless of whether the primary purpose of the trip is business or pleasure, expenses incurred at the destination that are directly attributable to a trade or business are deductible.
Expenses of traveling to and from a business destination may include airfare, bus and taxi, Uber, etc., fares, auto expenses, meals, lodging, and other expenses incidental to these. Except for meals in 2021 and 2022 provided by a restaurant that are 100% deductible, the deduction for meals is limited to 50% of their cost (See Meals and Entertainment).
Example - Travel in the U.S. - Nancy, a self-employed computer specialist from New York, made a trip to Nashville regarding the installation of a computer system at Nellis Air Conditioners, Inc. Nancy’s expenses were: round-trip airport shuttle, $20; round-trip airfare, $740; taxi fares between airport and Nellis, $30; three nights in motel, $240; three days of food purchased from a grocery store in Nashville, $150; porter, $3; suit cleaning, $6; car rental, $100. On the trip home, Nancy stopped in North Carolina to spend the weekend with a friend. Meals, entertainment and local transportation in North Carolina were $225 (this stop required no additional airfare). Nancy’s deduction is $1,214, i.e., $20 + $740 + $30 + $240 + (50% x $150) + $3 + $6 + $100. The expenses in North Carolina are non-deductible.
- Travel in the US Example
California Differences - Travel Expenses
California conforms to federal law related to job-related travel expenses prior to the TCJA changes. Thus, California still allows employees to deduct unreimbursed job-related travel expenses as part of miscellaneous itemized deductions subject to a 2% of federal AGI reduction.