Future Developments
For the most current details regarding travel expense regulations, especially any legislative updates after this publication, please visit IRS.gov/Pub463.
What’s New for 2023
Standard Mileage Rate. In 2023, the standard mileage rate set by the IRS for business car use is 65.5 cents ($0.655) per mile. This standard rate simplifies calculating vehicle expenses for business purposes. More information on car expenses and using this standard rate can be found in chapter 4, under Car Expenses and Standard Mileage Rate.
Vehicle Depreciation Limits. For vehicles acquired before September 28, 2017, and put into service in 2023, the maximum first-year depreciation, including special allowances and section 179 deductions, is capped at $12,200. For vehicles acquired after September 27, 2017, and placed in service in 2023, this limit increases to $20,200. If you choose not to claim the special depreciation allowance for a 2023 vehicle, the limit remains at $12,200. Further details are available in chapter 4, Depreciation Limits.
Section 179 Deduction. The highest amount deductible for section 179 property (including vehicles) placed in service in the 2023 tax year is $1,160,000. This limit decreases if the total cost of section 179 property exceeds $2,890,000. Chapter 4 provides a full explanation under Section 179 Deduction. Additionally, the maximum section 179 deduction for sport utility vehicles in service in 2023 is capped at $28,900.
Business Meal Deduction Update. The temporary 100% deduction for specific business meal expenses has ended. Generally, business meals remain 50% deductible. Refer to 50% Limit in chapter 2 for more information on these limitations.
Important Reminders
Missing Children Photography. The IRS partners with the National Center for Missing & Exploited Children® (NCMEC). Images of missing children may be included in this document. You can help by reviewing these photos and contacting 800-THE-LOST (800-843-5678) if you recognize a child.
Per Diem Rates. For current and past per diem rates, please consult the U.S. General Services Administration (GSA) website: GSA.gov/travel/plan-book/per-diem-rates.
Introduction
This guide is designed to help you understand which business-related expenses you can deduct, including those for:
- Business Travel
- Non-Entertainment Meals
- Business Gifts
- Transportation
An ordinary expense is commonly accepted in your business or trade. A necessary expense is helpful and appropriate for your business, though not strictly required. This publication will detail:
- Deductible expense types
- How to correctly report these expenses
- Required records for expense verification
- Handling expense reimbursements
Who Should Use This Guide?
This guide is for employees and sole proprietors with business-related travel, meal, gift, or transportation expenses.
For Users of Employer-Provided Vehicles:
If your employer provides a vehicle for your use, this is generally considered a fringe benefit and its value may be included in your income. Exceptions apply if the vehicle qualifies as a working condition fringe benefit, such as a qualified nonpersonal use vehicle.
A working condition fringe benefit is a service or property from your employer that would be deductible as a business expense if you paid for it yourself.
A qualified nonpersonal use vehicle is unlikely to be used for personal reasons due to its design. See Qualified nonpersonal use vehicles under Actual Car Expenses in chapter 4 for specific examples.
For guidance on reporting unreimbursed car expenses when using an employer-provided vehicle, see Vehicle Provided by Your Employer in chapter 6.
Who Does Not Need This Publication?
This publication is not intended for partnerships, corporations, trusts, or employers reimbursing employee expenses. These entities should refer to instructions for their specific tax forms.
Employees who meet all of the following conditions may not need this publication:
- You fully accounted to your employer for all work-related expenses.
- You received complete reimbursement for these expenses.
- You were required to return any excess reimbursement and did so.
- Your Form W-2 does not show any amount with code L in box 12.
If you meet these criteria, neither the expenses nor reimbursements need to be reported on your tax return. For more on reimbursements and employer accounting, see chapter 6.
If you meet these conditions but reimbursements are incorrectly listed on your W-2, request a corrected Form W-2 from your employer.
Information for Volunteers:
If you volunteer for a qualified charity, certain out-of-pocket expenses may be deductible as charitable contributions. Consult Out-of-Pocket Expenses in Giving Services in IRS Publication 526, Charitable Contributions, for details.
Comments and Suggestions.
We encourage your feedback and suggestions for improving this publication. Please submit comments at IRS.gov/FormComments or mail them to: Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224.
While we cannot respond individually to each comment, your feedback is valuable and will be considered for future revisions. Do not send tax questions, returns, or payments to this address.
Getting Answers to Your Tax Questions.
For tax questions not addressed in this publication or the How To Get Tax Help section, visit the IRS Interactive Tax Assistant page at IRS.gov/Help/ITA.
Accessing Tax Forms, Instructions, and Publications.
Download current and prior-year forms, instructions, and publications at IRS.gov/Forms.
Ordering Tax Forms, Instructions, and Publications.
Order current forms, instructions, and publications online at IRS.gov/OrderForms or by calling 800-829-3676 for prior-year items. Please do not resubmit requests. Online access is generally faster.
Useful Resources
Consider these resources for further information:
IRS Publication:
- 946 How To Depreciate Property
IRS Forms (and Instructions):
- Schedule A (Form 1040) Itemized Deductions
- Schedule C (Form 1040) Profit or Loss From Business (Sole Proprietorship)
- Schedule F (Form 1040) Profit or Loss From Farming
- Form 2106 Employee Business Expenses
- Form 4562 Depreciation and Amortization (Including Information on Listed Property)
See How To Get Tax Help for details on obtaining these resources.
1. Business Travel Expenses and Standard Rates
If your work requires you to travel temporarily away from your tax home, this chapter will guide you in determining deductible travel expenses.
Key topics in this chapter include:
- Defining travel away from home
- Temporary work assignments
- Deductible travel expenses
- Standard meal allowance
- Rules for US and international travel
- Luxury water travel guidelines
- Convention expense deductions
Defining Travel Expenses.
For tax purposes, travel expenses are the ordinary and necessary costs of traveling away from your tax home for your business, profession, or job. Remember, an ordinary expense is common in your field, and a necessary expense is helpful and appropriate for your business.
Table 1-1 provides examples of deductible travel expenses. Depending on your specific situation, other travel-related expenses may also be deductible.
Traveling Away From Home Explained
You are considered to be traveling “away from home” if:
- Your job duties require you to be away from your general tax home area for a period substantially longer than a typical workday, and
- You need to sleep or rest to meet job demands while away.
Simply napping in your car does not meet the rest requirement. You don’t need to be away for a full 24 hours, but the break from duty must be long enough for necessary sleep or rest.
Example 1:
Imagine you’re a railroad conductor on a scheduled round-trip between two cities, returning 16 hours later. At the turnaround point, you have a 6-hour layover where you eat meals and rent a hotel room for sleep before the return trip. In this case, you are considered to be traveling away from home.
Example 2:
Consider a truck driver who leaves and returns to their terminal within the same day, with only a one-hour break for a meal at the turnaround. Because there’s no provision for necessary sleep and the break is brief, this driver is not considered to be traveling away from home.
Special Note for Armed Forces Members:
If you are in the U.S. Armed Forces on permanent duty overseas, you are not considered to be traveling away from home and cannot deduct expenses for meals and lodging, even if you maintain a U.S. home for family members who cannot accompany you. However, moving expenses may be deductible if you are transferred to a new permanent duty station; see IRS Publication 3, Armed Forces’ Tax Guide.
Naval officers on permanent duty aboard ships with living facilities have their tax home aboard the ship for travel expense purposes.
Determining Your Tax Home
Your tax home is crucial for determining if you are traveling away from home.
Generally, your tax home is your primary place of business or post of duty, regardless of where your family home is located. This includes the entire city or general area where your work is situated.
If you have multiple regular places of business, your tax home is your main place of business. See Main place of business or work, below.
If your work is such that you don’t have a regular or main place of business, your tax home may be where you regularly live. See No main place of business or work, below.
If you lack a regular or main place of business or a regular place of residence, you are considered an itinerant. As an itinerant, your tax home is wherever you work, and you cannot claim travel expense deductions because you are never considered “away from home.”
Main Place of Business or Work.
When you have more than one work location, consider these factors to identify your main place of business:
- Total time spent at each location.
- Level of business activity at each location.
- Significance of income earned at each location.
Example:
You live in Cincinnati and have an 8-month seasonal job earning $40,000. For the other 4 months, you work a seasonal job in Miami, earning $15,000. Cincinnati is your main place of work because you spend more time there and earn the majority of your income there.
No Main Place of Business or Work.
Even without a regular or main place of work, you can still have a tax home, which may be your regular place of residence.
Factors to Determine Tax Home.
If you lack a regular or main place of business, use these three factors to determine your tax home:
- You conduct business in the area of your main home and use it for lodging while working there.
- You incur duplicate living expenses at your main home because your business requires you to be away.
- You have not abandoned the area of your historical lodging and claimed main home; family members reside there, or you frequently use it for lodging.
Meeting all three factors means your tax home is your regular residence. Satisfying two factors suggests you may have a tax home, depending on circumstances. Satisfying only one factor means you are an itinerant and cannot deduct travel expenses.
Example 1:
You are single, renting an apartment in Boston where you’ve worked for years. Your employer enrolls you in a 12-month executive training program across the U.S., with no return to Boston expected afterward. You maintain your Boston apartment, use it for personal business, and keep community ties.
You meet factors (2) and (3) but not (1) since you do no work in Boston during training. However, because you meet two factors, and considering all facts, Boston remains your tax home.
Example 2:
You are a salesperson covering several states with temporary assignments and no fixed office. You occasionally stay at your sister’s Dayton home for weekends but do no work there and pay no rent.
You do not satisfy any of the three factors. You are an itinerant with no tax home and cannot deduct travel expenses.
Tax Home vs. Family Home
If your family home is not at your tax home, you cannot deduct travel costs between these locations, nor meals and lodging at your tax home.
If you work temporarily in the city where your family lives, you may still be considered traveling away from home.
Example 1:
You are a truck driver based in Phoenix, but your family lives in Tucson. After long routes, you return to Phoenix and stay overnight before going home to Tucson. Phoenix is your tax home, so you cannot deduct meal and lodging expenses there, or travel from Phoenix to Tucson.
Example 2:
Your family home is in Pittsburgh, where you work 12 weeks a year. The rest of the year, you work in Baltimore for the same employer, eating in restaurants and staying in a rooming house. Your salary is consistent in both locations.
Baltimore, where you spend most of your work time and earn most of your salary, is your tax home. You cannot deduct meal and lodging expenses in Baltimore. However, trips back to Pittsburgh for work are considered travel away from your tax home, even when staying at your family home. You can deduct round-trip travel between Baltimore and Pittsburgh and your share of family living expenses (non-entertainment meals and lodging) while working in Pittsburgh.
Temporary vs. Indefinite Work Assignments
Your tax home location is key when determining if an assignment is temporary or indefinite.
Temporary Assignment vs. Indefinite Assignment.
A temporary assignment does not change your tax home. If your assignment away from your main work location is temporary, you’re considered “away from home” for the entire period and can deduct qualifying travel expenses. Generally, an assignment in a single location expected to last one year or less is considered temporary.
An indefinite assignment, however, shifts your tax home to the new location. You cannot deduct travel expenses in an indefinite assignment location, and any employer-provided living expense reimbursements are considered income, even if accounted for. Relocation expenses to a new tax home might be deductible as moving expenses (refer to IRS Publication 3 for details).
Note: For tax years after 2017 and before 2026, the deduction for certain moving expenses is suspended for non-military taxpayers. Moving expense deductions are limited to active military members moving due to a permanent change of duty station.
Exception for Federal Crime Investigations:
Federal employees on temporary duty status for federal crime investigations or prosecutions are exempt from the one-year rule. Travel expenses may be deductible even if exceeding one year, provided other deductibility requirements are met and the Attorney General (or designee) certifies the travel is:
- For the federal government;
- In temporary duty status; and
- To support federal crime investigation or prosecution.
Determining Temporary vs. Indefinite Status.
Assess the temporary or indefinite nature of your assignment at its start. An assignment expected to last a year or less is temporary unless circumstances indicate otherwise. A temporary assignment can become indefinite if circumstances change. Series of short assignments in the same location, adding up to a long period, might be considered indefinite.
Example 1:
You’re a construction worker living and regularly working in Los Angeles (your tax home). Due to work shortage, you take a job in Fresno scheduled for 8 months, which ends up lasting 10 months. Initially, you realistically expected an 8-month job, and it lasted less than a year. This Fresno job is temporary, and Los Angeles remains your tax home.
Example 2:
Same facts as Example 1, but you realistically expected the Fresno job to last 18 months, though it finished in 10 months. The Fresno job is indefinite because the realistic expectation was over a year, even if it lasted less. Fresno becomes your tax home, and travel expenses there are not deductible.
Example 3:
Same facts as Example 1, but you expected a 9-month Fresno job. After 8 months, you’re asked to stay 7 more months (total 15 months). Initially temporary, the changed circumstances after 8 months make it unrealistic to expect the job to last a year or less. Only travel expenses for the first 8 months are deductible. After that, Fresno becomes your tax home, and travel expenses are no longer deductible.
Returning Home on Days Off.
Returning to your tax home on days off during a temporary assignment means you are not considered away from home during those days. You cannot deduct meal and lodging costs at your tax home. However, travel expenses, including meals and lodging, between the temporary work location and your tax home are deductible, up to what it would have cost to stay at the temporary work location.
If you keep your hotel room during home visits, you can deduct its cost. You can also deduct return trip expenses up to the meal costs you would have incurred staying at your temporary work location.
Probationary Work Periods.
A job requiring relocation with a probationary period for satisfactory work is considered indefinite from the start. Expenses for meals and lodging during probation are not deductible.
Deductible Travel Expenses: What’s Included?
Once you’ve established that you are traveling away from your tax home, you can identify which expenses are deductible.
You can deduct ordinary and necessary expenses incurred while traveling away from home for business. Deductible expenses depend on your specific situation.
Table 1-1 provides a summary of deductible travel expenses, but other expenses may be deductible based on your circumstances.
Remember, detailed records of all travel expenses and employer advances are crucial. Use logs, diaries, notebooks, or other written records to track expenses. Table 5-1 (chapter 5) details required records and supporting documentation.
Separating Combined Costs.
If an expense includes costs for meals, entertainment, and other services (like lodging or transportation), you must separate the costs. Allocate expenses reasonably; for example, if a hotel bill includes meals, allocate accordingly.
Travel Expenses for Companions.
Generally, expenses for a spouse, dependent, or other individual accompanying you on a business trip or convention are not deductible.
Exception for Employees:
You can deduct travel expenses for a companion if they are:
- Your employee,
- Have a genuine business purpose for the travel, and
- Would otherwise be able to deduct the travel expenses themselves.
Exception for Business Associates:
If a business associate travels with you and meets conditions (2) and (3) above, their travel expenses are deductible. A business associate is someone with whom you could reasonably expect to actively conduct business, such as a client, customer, supplier, employee, agent, partner, or professional advisor.
Table 1-1. Deductible Travel Expenses
| Expense Category | Deductible Costs
