If you’re eligible, you generally can deduct two types of travel expenses related to your business:
1. Local transportation costs. Commuting expenses aren’t deductible, but costs related to trips from your workplace to other locations, such as to visit a client or vendor, are deductible. Examples of such costs include public transportation, taxi, ride share or your own auto, as well as parking and tolls. For those whose main place of business is their personal residence, business trips from the home office and back are considered deductible transportation and not non-deductible commuting.
Please see the special section below for the most effective ways of deducting auto expenses.
2. Away-from-home travel expenses. You can only deduct one-half of the cost of meals (50 percent) in 2024. Lodging expenses incurred while traveling away from home are fully deductible. You also can deduct 100 percent of your transportation expenses as long as business is the primary reason for your trip.
The 100 percent deduction for the cost of business meals and beverages purchased from restaurants in 2021 and 2022 was not extended.
Here are some additional considerations as you assess the deductibility of your local transportation and away-from-home travel expenses:
To be deductible, travel expenses must be “ordinary and necessary,” although “necessary” is liberally defined as “helpful and appropriate,” not “indispensable.” The deduction is also denied for that part of any travel expense that is “lavish or extravagant,” though this rule does not bar deducting the cost of first-class travel or deluxe accommodations or (subject to percentage limitations below) deluxe meals.
What does “away from home” mean? To deduct the costs of lodging and meals (and incidentals, see below) you must generally stay somewhere overnight. In other words, you must be away from your regular place of business longer than an ordinary day’s work and need to sleep or rest to meet the demands of your work while away from home. Otherwise, your costs are considered local transportation costs and the costs of lodging and meals are not deductible.
Where is your “home” for tax purposes? The general view is that your “home” for travel expense purposes is your place of business or your post of duty. It is not where your family lives (some courts have stated that it’s the general area of your residence). Here is an example:
George’s family lives in Boston and George’s business is in Washington, DC. George spends the weekends in Boston and the weekdays in Washington, where he stays in a hotel and eats out. For tax purposes, George’s “home” is in Washington, not Boston, therefore, he cannot deduct any of the following expenses: cost of traveling back and forth between Washington and Boston, cost of eating out in Washington, cost of staying in a hotel in Washington, or any costs incurred traveling between his hotel in Washington and his job in Washington (the latter are considered non-deductible commuting costs).
There are some rules in the tax law concerning where a taxpayer’s “home” is for purposes of deducting travel expenses that are less clear, such as when a taxpayer works at a temporary site or works in two different places.