Business Travel Away From Home
(within the U.S.)
The purpose of this article is to advise you of the rules for deducting the cost of
your out-of-town business travel within the U.S. These rules only apply if the business
conducted out of town reasonably requires an overnight stay.
The actual costs of travel (e.g., plane fare, cab to airport, etc.) are deductible for out
of town business trips. Significantly, however, you are also allowed to deduct the cost of
meals and lodging. Your meals are deductible even if they are “personal,” i.e., not
connected with business, although, as with all deductible meals, only 50% of the cost is
allowed (75% in 2006 and 2007 for long-haul truckers, certain airline, train and bus
employees, and certain merchant mariners). Additionally, no deduction will be allowed for
meals or lodging to the extent the expense is “lavish or extravagant.” Although this
term isn't defined in the tax rules, it has been interpreted to mean “unreasonable.”
Personal entertainment costs on the trip aren't deductible, but business-related costs
such as for dry-cleaning, phone calls, and computer rentals are.
Some allocations may be required if the trip is a combined business/pleasure trip, for
example, if you fly to a location for five days of business meetings and stay on for an
additional period of vacation. Only the cost of meals, lodging, etc., for the business
days are deductible—not for the personal vacation days.
On the other hand, with respect to the cost of the travel itself (plane fare, etc.), if
the trip is “primarily” business, the travel cost can be deducted in its entirety and
no allocation is required. Conversely, if the trip is primarily personal, none of the
travel costs are deductible. An important factor in determining if the trip is primarily
business or personal is the amount of time spent on each, although this isn't the sole
If the trip doesn't involve the actual conduct of business but is for the purpose of
attending a convention, seminar, etc., IRS checks the nature of the meetings carefully to
make sure they are not vacations in disguise. Be careful to save all material helpful in
establishing the business or professional nature of this travel.
The rules on deducting the costs for your spouse if she accompanies you on a business trip
are very restrictive. No deduction is allowed unless she's an employee of yours or your
company and her travel is also for a business purpose.
Finally, note that personal expenses you incur at home as a result of taking the trip
aren't deductible. For example, the cost of boarding a pet while you are away isn't