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Future Developments
Publication 463

Travel, Gift,
and Car
Expenses
For use in preparing

2025 Returns

Get forms and other information faster and easier at:
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Feb 27, 2026

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For the latest information about developments related to
Pub. 463, such as legislation enacted after it was
published, go to IRS.gov/Pub463.

What’s New
Special depreciation allowance. P.L.119-21 (July 4,
2025), commonly known as the One Big Beautiful Bill Act
(OBBBA), made several amendments to Code section
168(k) to provide taxpayers with a permanent 100% additional first-year depreciation deduction for qualified property acquired and placed in service, and specified plants
planted or grafted, after January 19, 2025. Specifically,
OBBBA replaced the annual phasedown of the applicable
percentage for the Code section 168(k) additional
first-year depreciation deduction with a permanent 100%
additional first-year depreciation deduction for qualified
property acquired, or specified plants planted or grafted,
after January 19, 2025. Additionally, OBBBA amended
Code section 168(k) to allow taxpayers to elect to deduct
40% (60% for certain property having longer production
periods or certain aircraft), instead of 100%, additional
first-year depreciation for qualified property placed in
service, or specified plants planted or grafted, during the
first-tax year ending after January 19, 2025. The amendments generally apply to property acquired, or specified
plants planted or grafted, after January 19, 2025. See Notice 2026-11.
For 2025, the first-year special (“bonus”) depreciation
allowance on qualified property (including cars, trucks,
and vans) is 100% for qualified property acquired and
placed in service after January 19, 2025. However, the
special depreciation allowance remains 40% for qualified
property placed in service during 2025 that is acquired after September 27, 2017, and before January 20, 2025.
Special depreciation allowance is explained in chapter 4.
Standard mileage rate. For 2025, the standard mileage
rate for the cost of operating your car for business use is
70 cents ($0.70) per mile. Car expenses and use of the
standard mileage rate are explained in chapter 4.
Depreciation limits on cars, trucks, and vans. The depreciation limitations for passenger automobiles acquired
after September 27, 2017, and placed in service during
calendar year 2025, for which the Code section 168(k) additional first-year depreciation deduction applies are first
tax year, $20,200; second tax year, $19,600; third tax
year, $11,800; and each succeeding year, $7,060. See
Revenue Procedure 2025-16, Table 1. Depreciation limits
are explained in chapter 4.
The depreciation limitations for passenger automobiles
placed in service during calendar year 2025 for which no
Code section 168(k) additional first-year depreciation deduction applies are first tax year, $12,200; second tax
year, $19,600; third tax year, $11,800; and each succeeding year, $7,060. See Revenue Procedure 2025-16, Table 2.

Publication 463 (2025) Catalog Number 11081L
Department of the Treasury Internal Revenue Service www.irs.gov

Section 179 deduction. For tax years beginning in
2025, the aggregate cost of any Code section 179 property that a taxpayer elects to treat as an expense cannot
exceed $2,500,000 and the cost of any sport utility vehicle
that may be taken into account under Code section 179
cannot exceed $31,300. The $2,500,000 limitation is reduced (but not below zero) by the amount by which the
cost of Code section 179 property placed in service during the 2025 tax year exceeds $4,000,000. (See Revenue
Procedure 2025-32.)

Reminders
Per diem rates. Current and prior per diem rates may be
found on the U.S. General Services Administration (GSA)
website at GSA.gov/travel/plan-book/per-diem-rates.
Photographs of missing children. The IRS is a proud
partner with the National Center for Missing & Exploited
Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring
these children home by looking at the photographs and
calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

A working condition fringe benefit is any property or
service provided to you by your employer, the cost of
which would be allowable as an employee business expense deduction if you had paid for it.
A qualified nonpersonal use vehicle is one that isn’t
likely to be used more than minimally for personal purposes because of its design. See Qualified nonpersonal use
vehicles under Actual Car Expenses in chapter 4.
For information on how to report your car expenses that
your employer didn’t provide or reimburse you for (such as
when you pay for gas and maintenance for a car your employer provides), see Vehicle Provided by Your Employer
in chapter 6.
Who doesn’t need to use this publication. Partnerships, corporations, trusts, and employers who reimburse
their employees for business expenses should refer to the
instructions for their required tax forms for information on
deducting travel, meals, and entertainment expenses.
If you are an employee, you won’t need to read this
publication if all of the following are true.

• You fully accounted to your employer for your work-related expenses.

• You received full reimbursement for your expenses.
• Your employer required you to return any excess reimbursement and you did so.

Introduction

• There is no amount shown with a code L in box 12 of

You may be able to deduct the ordinary and necessary
business-related expenses you have for:

If you meet all of these conditions, there is no need to
show the expenses or the reimbursements on your return.
If you would like more information on reimbursements and
accounting to your employer, see chapter 6.

• Travel,
• Non-entertainment-related meals,
• Gifts, or
• Transportation.

An ordinary expense is one that is common and accepted
in your trade or business. A necessary expense is one that
is helpful and appropriate for your business. An expense
doesn’t have to be required to be considered necessary.
This publication explains:

• What expenses are deductible,
• How to report them on your return,
• What records you need to prove your expenses, and
• How to treat any expense reimbursements you may
receive.

Who should use this publication. You should read this
publication if you are an employee or a sole proprietor who
has business-related travel, non-entertainment-related
meals, gift, or transportation expenses.
Users of employer-provided vehicles. If an employer-provided vehicle was available for your use, you received a fringe benefit. Generally, your employer must include the value of the use or availability of the vehicle in
your income. However, there are exceptions if the use of
the vehicle qualifies as a working condition fringe benefit
(such as the use of a qualified nonpersonal use vehicle).
2

your Form W-2, Wage and Tax Statement.

Tip: If you meet these conditions and your employer included reimbursements on your Form W-2 in error, ask
your employer for a corrected Form W-2.
Volunteers. If you perform services as a volunteer
worker for a qualified charity, you may be able to deduct
some of your costs as a charitable contribution. See
Out-of-Pocket Expenses in Giving Services in Pub. 526,
Charitable Contributions, for information on the expenses
you can deduct.
Comments and suggestions. We welcome your comments about this publication and suggestions for future
editions.
You can send us comments through IRS.gov/
FormComments. Or, you can write to the Internal Revenue
Service, Tax Forms and Publications, 1111 Constitution
Ave. NW, IR-6526, Washington, DC 20224.
Although we can’t respond individually to each comment received, we do appreciate your feedback and will
consider your comments and suggestions as we revise
our tax forms, instructions, and publications. Don’t send
tax questions, tax returns, or payments to the above address.
Getting answers to your tax questions. If you have
a tax question not answered by this publication or the How
To Get Tax Help section at the end of this publication, go
Publication 463 (2025)

to the IRS Interactive Tax Assistant page at IRS.gov/
Help/ITA where you can find topics by using the search
feature or viewing the categories listed.
Getting tax forms, instructions, and publications.
Go to IRS.gov/Forms to download current and prior-year
forms, instructions, and publications.
Ordering tax forms, instructions, and publications.
Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order
prior-year forms and instructions. The IRS will process
your order for forms and publications as soon as possible.
Don’t resubmit requests you’ve already sent us. You can
get forms and publications faster online.

Useful Items

Traveling Away From Home
You are traveling away from home if:

• Your duties require you to be away from the general

area of your tax home (defined later) substantially longer than an ordinary day’s work, and

• You need to sleep or rest to meet the demands of your

You may want to see:

work while away from home.

Publication
946 How To Depreciate Property
946

Form (and Instructions)
Schedule A (Form 1040) Itemized Deductions
Schedule A (Form 1040)

Schedule C (Form 1040) Profit or Loss From
Business (Sole Proprietorship)
Schedule C (Form 1040)

Schedule F (Form 1040) Profit or Loss From
Farming
Schedule F (Form 1040)

2106 Employee Business Expenses
2106

4562 Depreciation and Amortization (Including
Information on Listed Property)
4562

See How To Get Tax Help for information about getting
these publications and forms.

1.
Travel
If you temporarily travel away from your tax home, you can
use this chapter to determine if you have deductible travel
expenses.
This chapter discusses:

• Traveling away from home,
• Temporary assignment or job, and
• What travel expenses are deductible.

This rest requirement isn’t satisfied by merely napping in
your car. You don’t have to be away from your tax home for
a whole day or from dusk to dawn as long as your relief
from duty is long enough to get necessary sleep or rest.
Example 1. You are a railroad conductor. You leave
your home terminal on a regularly scheduled round-trip
run between two cities and return home 16 hours later.
During the run, you have 6 hours off at your turnaround
point where you eat two meals and rent a hotel room to
get necessary sleep before starting the return trip. You are
considered to be away from home.
Example 2. You are a truck driver. You leave your terminal and return to it later the same day. You get an hour
off at your turnaround point to eat. Because you aren’t off
to get necessary sleep and the brief time off isn’t an adequate rest period, you aren’t traveling away from home.
Members of the Armed Forces. If you are a member of
the U.S. Armed Forces on a permanent duty assignment
overseas, you aren’t traveling away from home. You can’t
deduct your expenses for meals and lodging. You can’t
deduct these expenses even if you have to maintain a
home in the United States for your family members who
aren’t allowed to accompany you overseas. If you are
transferred from one permanent duty station to another,
you may have deductible moving expenses, which are explained in Pub. 3, Armed Forces’ Tax Guide.
A naval officer assigned to permanent duty aboard a
ship that has regular eating and living facilities has a tax
home (explained next) aboard the ship for travel expense
purposes.

Tax Home

It also discusses the standard meal allowance, rules for
travel inside and outside the United States, luxury water
travel, and deductible convention expenses.
Travel expenses defined. For tax purposes, travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or
job.
Publication 463 (2025)

An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one
that is helpful and appropriate for your business. An expense doesn’t have to be required to be considered necessary.
You will find examples of deductible travel expenses in
Table 1-1 .

Chapter 1

To determine whether you are traveling away from home,
you must first determine the location of your tax home.
Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain
your family home. It includes the entire city or general area
in which your business or work is located.
Travel

3

If you have more than one regular place of business,
your tax home is your main place of business. See Main
place of business or work, later.
If you don’t have a regular or a main place of business
because of the nature of your work, then your tax home
may be the place where you regularly live. See No main
place of business or work, later.
If you don’t have a regular or main place of business or
post of duty and there is no place where you regularly live,
you are considered an itinerant (a transient) and your tax
home is wherever you work. As an itinerant, you can’t
claim a travel expense deduction because you are never
considered to be traveling away from home.
Main place of business or work. If you have more than
one place of work, consider the following when determining which one is your main place of business or work.

• The total time you ordinarily spend in each place.
• The level of your business activity in each place.
• Whether your income from each place is significant or
insignificant.

Example. You live in Cincinnati where you have a seasonal job for 8 months each year and earn $40,000. You
work the other 4 months in Miami, also at a seasonal job,
and earn $15,000. Cincinnati is your main place of work
because you spend most of your time there and earn most
of your income there.
No main place of business or work. You may have a
tax home even if you don’t have a regular or main place of
work. Your tax home may be the home where you regularly live.
Factors used to determine tax home. If you don’t
have a regular or main place of business or work, use the
following three factors to determine where your tax home
is.

a 12-month executive training program. You don’t expect
to return to work in Boston after you complete your training.
During your training, you don’t do any work in Boston.
Instead, you receive classroom and on-the-job training
throughout the United States. You keep your apartment in
Boston and return to it frequently. You use your apartment
to conduct your personal business. You also keep up your
community contacts in Boston. When you complete your
training, you are transferred to Los Angeles.
You don’t satisfy factor (1) because you didn’t work in
Boston. You satisfy factor (2) because you had duplicate
living expenses. You also satisfy factor (3) because you
didn’t abandon your apartment in Boston as your main
home, you kept your community contacts, and you frequently returned to live in your apartment. Therefore, you
have a tax home in Boston.
Example 2. You are an outside salesperson with a
sales territory covering several states. Your employer’s
main office is in Newark, but you don’t conduct any business there. Your work assignments are temporary, and
you have no way of knowing where your future assignments will be located. You have a room in your married sister’s house in Dayton. You stay there for one or two weekends a year, but you do no work in the area. You don’t pay
your sister for the use of the room.
You don’t satisfy any of the three factors listed earlier.
You are an itinerant and have no tax home.

Tax Home Different From Family
Home
If you (and your family) don’t live at your tax home (defined
earlier), you can’t deduct the cost of traveling between
your tax home and your family home. You also can’t deduct the cost of meals and lodging while at your tax home.
See Example 1, later.

1. You perform part of your business in the area of your
main home and use that home for lodging while doing
business in the area.

If you are working temporarily in the same city where
you and your family live, you may be considered as traveling away from home. See Example 2, later.

2. You have living expenses at your main home that you
duplicate because your business requires you to be
away from that home.

Example 1. You are a truck driver and you and your
family live in Tucson. You are employed by a trucking firm
that has its terminal in Phoenix. At the end of your long
runs, you return to your home terminal in Phoenix and
spend one night there before returning home. You can’t
deduct any expenses you have for meals and lodging in
Phoenix or the cost of traveling from Phoenix to Tucson.
This is because Phoenix is your tax home.

3. You haven’t abandoned the area in which both your
historical place of lodging and your claimed main
home are located, you have a member or members of
your family living at your main home, or you often use
that home for lodging.

Example 1. You are single and live in Boston in an
apartment you rent. You have worked for your employer in
Boston for a number of years. Your employer enrolls you in

Example 2. Your family home is in Pittsburgh, where
you work 12 weeks a year. The rest of the year you work
for the same employer in Baltimore. In Baltimore, you eat
in restaurants and sleep in a rooming house. Your salary is
the same whether you are in Pittsburgh or Baltimore.
Because you spend most of your working time and earn
most of your salary in Baltimore, that city is your tax home.
You can’t deduct any expenses you have for meals and
lodging there. However, when you return to work in Pittsburgh, you are away from your tax home even though you

4

Travel

If you satisfy all three factors, your tax home is the
home where you regularly live. If you satisfy only two factors, you may have a tax home depending on all the facts
and circumstances. If you satisfy only one factor, you are
an itinerant; your tax home is wherever you work and you
can’t deduct travel expenses.

Chapter 1

Publication 463 (2025)

stay at your family home. You can deduct the cost of your
round trip between Baltimore and Pittsburgh. You can also
deduct your part of your family’s living expenses for
non-entertainment-related meals and lodging while you
are living and working in Pittsburgh.

Temporary Assignment or Job
You may regularly work at your tax home and also work at
another location. It may not be practical to return to your
tax home from this other location at the end of each workday.
Temporary assignment vs. indefinite assignment. If
your assignment or job away from your main place of work
is temporary, your tax home doesn’t change. You are considered to be away from home for the whole period you
are away from your main place of work. You can deduct
your travel expenses if they otherwise qualify for deduction. Generally, a temporary assignment in a single location is one that is realistically expected to last (and does in
fact last) for 1 year or less.
However, if your assignment or job is indefinite, the location of the assignment or job becomes your new tax
home and you can’t deduct your travel expenses while
there. An assignment or job in a single location is considered indefinite if it is realistically expected to last for more
than 1 year, whether or not it actually lasts for more than 1
year.
If your assignment is indefinite, you must include in your
income any amounts you receive from your employer for
living expenses, even if they are called “travel allowances”
and you account to your employer for them.
The cost of relocating is no longer deductible as a moving expense except for active members of the military
moving due to a permanent change of duty station. See
Pub. 3 for more information.
Exception for federal crime investigations or prosecutions. If you are a federal employee participating in a
federal crime investigation or prosecution, you aren’t subject to the 1-year rule. This means you may be able to deduct travel expenses even if you are away from your tax
home for more than 1 year provided you meet the other requirements for deductibility.
For you to qualify, the Attorney General (or their designee) must certify that you are traveling:

• For the federal government;
• In a temporary duty status; and
• To investigate, prosecute, or provide support services
for the investigation or prosecution of a federal crime.

Determining temporary or indefinite. You must determine whether your assignment is temporary or indefinite
when you start work. If you expect an assignment or job to
last for 1 year or less, it is temporary unless there are facts
and circumstances that indicate otherwise. An assignment
or job that is initially temporary may become indefinite due
to changed circumstances. A series of assignments to the
Publication 463 (2025)

Chapter 1

same location, all for short periods but that together cover
a long period, may be considered an indefinite assignment.
The following examples illustrate whether an assignment or job is temporary or indefinite.
Example 1. You are a construction worker. You live
and regularly work in Los Angeles. You are a member of a
trade union in Los Angeles that helps you get work in the
Los Angeles area. Your tax home is Los Angeles. Because of a shortage of work, you took a job on a construction project in Fresno. Your job was scheduled to end in 8
months. The job actually lasted 10 months.
You realistically expected the job in Fresno to last 8
months. The job actually did last less than 1 year. The job
is temporary and your tax home is still in Los Angeles.
Example 2. The facts are the same as in Example 1,
except that you realistically expected the work in Fresno to
last 18 months. The job was actually completed in 10
months.
Your job in Fresno is indefinite because you realistically
expected the work to last longer than 1 year, even though
it actually lasted less than 1 year. You can’t deduct any
travel expenses you had in Fresno because Fresno became your tax home.
Example 3. The facts are the same as in Example 1,
except that you realistically expected the work in Fresno to
last 9 months. After 8 months, however, you were asked to
remain for 7 more months (for a total actual stay of 15
months).
Initially, you realistically expected the job in Fresno to
last for only 9 months. However, due to changed circumstances occurring after 8 months, it was no longer realistic
for you to expect that the job in Fresno would last for 1
year or less. You can deduct only your travel expenses for
the first 8 months. You can’t deduct any travel expenses
you had after that time because Fresno became your tax
home when the job became indefinite.
Going home on days off. If you go back to your tax
home from a temporary assignment on your days off, you
aren’t considered away from home while you are in your
hometown. You can’t deduct the cost of your meals and
lodging there. However, you can deduct your travel expenses, including meals and lodging, while traveling between
your temporary place of work and your tax home. You can
claim these expenses up to the amount it would have cost
you to stay at your temporary place of work.
If you keep your hotel room during your visit home, you
can deduct the cost of your hotel room. In addition, you
can deduct your expenses of returning home up to the
amount you would have spent for meals had you stayed at
your temporary place of work.
Probationary work period. If you take a job that requires you to move, with the understanding that you will
keep the job if your work is satisfactory during a probationary period, the job is indefinite. You can’t deduct any of
your expenses for meals and lodging during the probationary period.
Travel

5

What Travel Expenses Are
Deductible?
Once you have determined that you are traveling away
from your tax home, you can determine what travel expenses are deductible.
You can deduct ordinary and necessary expenses you
have when you travel away from home on business. The
type of expense you can deduct depends on the facts and
your circumstances.
Table 1-1 summarizes travel expenses you may be able
to deduct. You may have other deductible travel expenses
that aren’t covered there, depending on the facts and your
circumstances.
When you travel away from home on business, you
must keep records of all the expenses you have and any
advances you receive from your employer. You can use a
log, diary, notebook, or any other written record to keep
track of your expenses. The types of expenses you need
to record, along with supporting documentation, are described in Table 5-1 (see chapter 5).
Separating costs. If you have one expense that includes
the costs of non-entertainment-related meals, entertainment, and other services (such as lodging or transporta-

tion), you must allocate that expense between the cost of
non-entertainment-related meals, and entertainment and
the cost of other services. You must have a reasonable
basis for making this allocation. For example, you must allocate your expenses if a hotel includes one or more
meals in its room charge.
Travel expenses for another individual. If a spouse,
dependent, or other individual goes with you (or your employee) on a business trip or to a business convention,
you generally can’t deduct their travel expenses.
Employee. You can deduct the travel expenses of
someone who goes with you if that person:
1. Is your employee,
2. Has a bona fide business purpose for the travel, and
3. Would otherwise be allowed to deduct the travel expenses.
Business associate. If a business associate travels
with you and meets the conditions in (2) and (3) above,
you can deduct the travel expenses you have for that person. A business associate is someone with whom you
could reasonably expect to actively conduct business. A
business associate can be a current or prospective (likely
to become) customer, client, supplier, employee, agent,
partner, or professional advisor.

Table 1-1. Travel Expenses You Can Deduct
This chart summarizes expenses you can deduct when you travel away from home for business purposes.
IF you have expenses for...

THEN you can deduct the cost of...

transportation

travel by airplane, train, bus, or car between your home and your business destination. If you were provided
with a free ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero. If
you travel by ship, see Luxury Water Travel and Cruise Ships under Conventions, later, for additional rules and
limits.

taxi, commuter bus, and
airport limousine

fares for these and other types of transportation that take you between:
• The airport or station and your hotel; and
• The hotel and the work location of your customers or clients, your business meeting place, or your
temporary work location.

baggage and shipping

sending baggage and sample or display material between your regular and temporary work locations.

car

operating and maintaining your car when traveling away from home on business. You can deduct actual
expenses or the standard mileage rate, as well as business-related tolls and parking. If you rent a car while
away from home on business, you can deduct only the business-use portion of the expenses.

lodging and meals

your lodging and non-entertainment-related meals if your business trip is overnight or long enough that you
need to stop for sleep or rest to properly perform your duties. Meals include amounts spent for food,
beverages, taxes, and related tips. See Meals, later, for additional rules and limits.

cleaning

dry cleaning and laundry.

telephone

business calls while on your business trip. This includes business communication by fax machine or other
communication devices.

tips

tips you pay for any expenses in this chart.

other

other similar ordinary and necessary expenses related to your business travel. These expenses might include
transportation to or from a business meal, public stenographer’s fees, computer rental fees, and operating
and maintaining a house trailer.

Bona fide business purpose. A bona fide business
purpose exists if you can prove a real business purpose
for the individual’s presence. Incidental services, such as

typing notes or assisting in entertaining customers, aren’t
enough to make the expenses deductible.

6

Travel

Chapter 1

Publication 463 (2025)

Example. You drive to Chicago on business and take
your spouse with you. Your spouse isn’t your employee.
Your spouse occasionally types notes, performs similar
services, and accompanies you to luncheons and dinners.
The performance of these services doesn’t establish that
your spouse’s presence on the trip is necessary to the
conduct of your business. Your spouse’s expenses aren’t
deductible.
You pay $199 a day for a double room. A single room
costs $149 a day. You can deduct the total cost of driving
your car to and from Chicago, but only $149 a day for your
hotel room. If both you and your spouse use public transportation, you can only deduct your fare.

Meals
You can deduct a portion of the cost of meals if it is necessary for you to stop for substantial sleep or rest to properly
perform your duties while traveling away from home on
business. Meal and entertainment expenses are discussed in chapter 2.
Lavish or extravagant. You can’t deduct expenses for
meals that are lavish or extravagant. An expense isn’t considered lavish or extravagant if it is reasonable based on
the facts and circumstances. Meal expenses won’t be disallowed merely because they are more than a fixed dollar
amount or because the meals take place at deluxe restaurants, hotels, or resorts.
50% limit on meals. You can figure your meal expenses
using either of the following methods.

• Actual cost.
• The standard meal allowance.
Both of these methods are explained below. But, regardless of the method you use, you can generally deduct only
50% of the unreimbursed cost of your meals.
If you are reimbursed for the cost of your meals, how
you apply the 50% limit depends on whether your employer’s reimbursement plan was accountable or nonaccountable. If you aren’t reimbursed, the 50% limit applies even if
the unreimbursed meal expense is for business travel.
Chapter 2 discusses the 50% limit in more detail, and
chapter 6 discusses accountable and nonaccountable
plans.

Actual Cost
You can use the actual cost of your meals to figure the
amount of your expense before reimbursement and application of the 50% deduction limit. If you use this method,
you must keep records of your actual cost.

Standard Meal Allowance
Generally, you can use the “standard meal allowance”
method as an alternative to the actual cost method. It allows you to use a set amount for your daily meals and incidental expenses (M&IE), instead of keeping records of
your actual costs. The set amount varies depending on
Publication 463 (2025)

Chapter 1

where and when you travel. In this publication, “standard
meal allowance” refers to the federal rate for M&IE, discussed later under Amount of standard meal allowance. If
you use the standard meal allowance, you must still keep
records to prove the time, place, and business purpose of
your travel. See the recordkeeping rules for travel in chapter 5.
Incidental expenses. The term “incidental expenses”
means fees and tips given to porters, baggage carriers,
hotel staff, and staff on ships.
Incidental expenses don’t include expenses for laundry,
cleaning and pressing of clothing, lodging taxes, costs of
telegrams or telephone calls, transportation between places of lodging or business and places where meals are
taken, or the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings.
Incidental-expenses-only method. You can use an optional method (instead of actual cost) for deducting incidental expenses only. The amount of the deduction is $5 a
day. You can use this method only if you didn’t pay or incur
any meal expenses. You can’t use this method on any day
that you use the standard meal allowance. This method is
subject to the proration rules for partial days. See Travel
for days you depart and return, later in this chapter.
Note: The incidental-expenses-only method isn’t subject to the 50% limit discussed below.
Caution: Federal employees should refer to the Federal Travel Regulations (FTR) at eCFR.gov for changes affecting claims for reimbursement.
50% limit may apply. If you use the standard meal allowance method for non-entertainment-related meal expenses and you aren’t reimbursed or you are reimbursed under a nonaccountable plan, you can generally deduct only
50% of the standard meal allowance. If you are reimbursed under an accountable plan and you are deducting
amounts that are more than your reimbursements, you
can deduct only 50% of the excess amount. The 50% limit
is discussed in more detail in chapter 2, and accountable
and nonaccountable plans are discussed in chapter 6.
Caution: There is no optional standard lodging
amount similar to the standard meal allowance. Your allowable lodging expense deduction is your actual cost.
Who can use the standard meal allowance. You can
use the standard meal allowance whether you are an employee or self-employed, and whether or not you are reimbursed for your traveling expenses.
Use of the standard meal allowance for other travel.
You can use the standard meal allowance to figure your
meal expenses when you travel in connection with investment and other income-producing property. You can also
use it to figure your meal expenses when you travel for
qualifying educational purposes.
Amount of standard meal allowance.
meal allowance is the federal M&IE rate.
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Most major cities and many other localities in the United States are designated as high-cost areas, qualifying
for higher standard meal allowances.
You can find this information (organized by state) at
GSA.gov/travel/plan-book/per-diem-rates. Enter a ZIP
code or select a city and state for the per diem rates for
the current fiscal year. Per diem rates for prior fiscal years
are available by using the drop-down menu.
If you travel to more than one location in one day, use
the rate in effect for the area where you stop for sleep or
rest. If you work in the transportation industry, however,
see Special rate for transportation workers, later.
Federal government’s fiscal year. Per diem rates are
listed by the federal government’s fiscal year, which runs
from October 1 to September 30. You can choose to use
the rates from the 2024 fiscal year per diem tables or the
rates from the 2025 fiscal year tables, but you must consistently use the same tables for all travel you are reporting on your income tax return for the year. See Transition
Rules, later.
Standard meal allowance for areas outside the
continental United States. The standard meal allowance rates above don’t apply to travel in Alaska, Hawaii, or
any other location outside the continental United States.
The Department of Defense establishes per diem rates for
Alaska, Hawaii, Puerto Rico, American Samoa, Guam,
Midway, the Northern Mariana Islands, the U.S. Virgin Islands, Wake Island, and other non-foreign areas outside
the continental United States. The Department of State
establishes per diem rates for all other foreign areas.
You can access per diem rates for non-foreign areas
outside the continental United States at Travel.dod.mil/
Travel-Transportation-Rates/Per-Diem/Per-Diem-RateLookup/. You can access all other foreign per diem rates
at aoprals.state.gov/web920/per_diem.asp.
Special rate for transportation workers. You can
use a special standard meal allowance if you work in the
transportation industry. You are in the transportation industry if your work:

• Directly involves moving people or goods by airplane,
barge, bus, ship, train, or truck; and

• Regularly requires you to travel away from home and,
during any single trip, usually involves travel to areas
eligible for different standard meal allowance rates.

If this applies, you can claim a standard meal allowance of
$80 per day ($86 for travel outside the continental United
States) in 2025.
Using the special rate for transportation workers eliminates the need for you to determine the standard meal allowance for every area where you stop for sleep or rest. If
you choose to use the special rate for any trip, you must
use the special rate (and not use the regular standard
meal allowance rates) for all trips you take that year.
Travel for days you depart and return. For both the
day you depart for and the day you return from a business
trip, you must prorate the standard meal allowance (figure

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a reduced amount for each day). You can do so by one of
two methods.

• Method 1: You can claim 3/4 of the standard meal allowance.

• Method 2: You can prorate using any method that you
consistently apply and that is in accordance with reasonable business practice.

Example. You are employed in New Orleans as a convention planner. In March, your employer sent you on a
3-day trip to Washington, DC, to attend a planning seminar. You left your home in New Orleans at 10 a.m. on
Wednesday and arrived in Washington, DC, at 5:30 p.m.
After spending 2 nights there, you flew back to New Orleans on Friday and arrived back home at 8 p.m. Your employer gave you a flat amount to cover your expenses and
included it with your wages.
Under Method 1, you can claim 21/2 days of the standard meal allowance for Washington, DC: 3/4 of the daily
rate for Wednesday and Friday (the days you departed
and returned), and the full daily rate for Thursday.
Under Method 2, you could also use any method that
you apply consistently and that is in accordance with reasonable business practice. For example, you could claim 3
days of the standard meal allowance even though a federal employee would have to use Method 1 and be limited
to only 21/2 days.

Travel in the United States
The following discussion applies to travel in the United
States. For this purpose, the United States includes the 50
states and the District of Columbia. The treatment of your
travel expenses depends on how much of your trip was
business related and on how much of your trip occurred
within the United States. See Part of Trip Outside the United States, later.

Trip Primarily for Business
You can deduct all of your travel expenses if your trip was
entirely business related. If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or
had other personal activities, you can deduct only your
business-related travel expenses. These expenses include the travel costs of getting to and from your business
destination and any business-related expenses at your
business destination.
Example. You work in Atlanta and take a business trip
to New Orleans in May. Your business travel totals 900
miles round trip. On your way home, you stop in Mobile to
visit your parents. You spend $2,165 for the 9 days you are
away from home for travel, non-entertainment-related
meals, lodging, and other travel expenses. If you hadn’t
stopped in Mobile, you would have been gone only 6
days, and your total cost would have been $1,633.50. You
can deduct $1,633.50 for your trip, including the cost of
round-trip transportation to and from New Orleans. The
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deduction for your non-entertainment-related meals is
subject to the 50% limit on meals mentioned earlier.

Trip Primarily for Personal Reasons
If your trip was primarily for personal reasons, such as a
vacation, the entire cost of the trip is a nondeductible personal expense. However, you can deduct any expenses
you have while at your destination that are directly related
to your business.
A trip to a resort or on a cruise ship may be a vacation
even if the promoter advertises that it is primarily for business. The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, won’t change what is
really a vacation into a business trip.

Part of Trip Outside the United States
If part of your trip is outside the United States, use the
rules described later in this chapter under Travel Outside
the United States for that part of the trip. For the part of
your trip that is inside the United States, use the rules for
travel in the United States. Travel outside the United
States doesn’t include travel from one point in the United
States to another point in the United States. The following
discussion can help you determine whether your trip was
entirely within the United States.
Public transportation. If you travel by public transportation, any place in the United States where that vehicle
makes a scheduled stop is a point in the United States.
Once the vehicle leaves the last scheduled stop in the
United States on its way to a point outside the United
States, you apply the rules under Travel Outside the United States, later.
Example. You fly from New York to Puerto Rico with a
scheduled stop in Miami. Puerto Rico isn’t considered part
of the United States for purposes of travel. You return to
New York nonstop. The flight from New York to Miami is in
the United States, so only the flight from Miami to Puerto
Rico is outside the United States. Because there are no
scheduled stops between Puerto Rico and New York, all
of the return trip is outside the United States.
Private car. Travel by private car in the United States is
travel between points in the United States, even though
you are on your way to a destination outside the United
States.
Example. You travel by car from Denver to Mexico City
and return. Your travel from Denver to the border and from
the border back to Denver is travel in the United States,
and the rules in this section apply. The rules below under
Travel Outside the United States apply to your trip from the
border to Mexico City and back to the border.

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Travel Outside the United States
If any part of your business travel is outside the United
States, some of your deductions for the cost of getting to
and from your destination may be limited. For this purpose, the United States includes the 50 states and the
District of Columbia.
How much of your travel expenses you can deduct depends in part upon how much of your trip outside the United States was business related.

Travel Entirely for Business or Considered
Entirely for Business
You can deduct all your travel expenses of getting to and
from your business destination if your trip is entirely for
business or considered entirely for business.
Travel entirely for business. If you travel outside the
United States and you spend the entire time on business
activities, you can deduct all of your travel expenses.
Travel considered entirely for business. Even if you
didn’t spend your entire time on business activities, your
trip is considered entirely for business if you meet at least
one of the following four exceptions.
Exception 1—no substantial control. Your trip is
considered entirely for business if you didn’t have substantial control over arranging the trip. The fact that you
control the timing of your trip doesn’t, by itself, mean that
you have substantial control over arranging your trip.
You don’t have substantial control over your trip if you:

• Are an employee who was reimbursed or paid a travel
expense allowance, and

• Aren’t related to your employer, or
• Aren’t a managing executive.
“Related to your employer” is defined later in chapter 6
under Per Diem and Car Allowances.
A “managing executive” is an employee who has the
authority and responsibility, without being subject to the
veto of another, to decide on the need for the business
travel.
A self-employed person generally has substantial control over arranging business trips.
Exception 2—outside United States no more than
a week. Your trip is considered entirely for business if you
were outside the United States for a week or less, combining business and nonbusiness activities. One week
means 7 consecutive days. In counting the days, don’t
count the day you leave the United States, but do count
the day you return to the United States.
Example. You traveled to Brussels primarily for business. You left Denver on Tuesday and flew to New York.
On Wednesday, you flew from New York to Brussels, arriving the next morning. On Thursday and Friday, you had
business discussions, and from Saturday until Tuesday,
you were sightseeing. You flew back to New York, arriving
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Wednesday afternoon. On Thursday, you flew back to
Denver.
Although you were away from your home in Denver for
more than a week, you weren’t outside the United States
for more than a week. This is because the day you depart
doesn’t count as a day outside the United States.
You can deduct your cost of the round-trip flight between Denver and Brussels. You can also deduct the cost
of your stay in Brussels for Thursday and Friday while you
conducted business. However, you can’t deduct the cost
of your stay in Brussels from Saturday through Tuesday
because those days were spent on nonbusiness activities.
Exception 3—less than 25% of time on personal
activities. Your trip is considered entirely for business if:

• You were outside the United States for more than a
week, and

• You spent less than 25% of the total time you were

outside the United States on nonbusiness activities.

For this purpose, count both the day your trip began and
the day it ended.
Example. You flew from Seattle to Tokyo, where you
spent 14 days on business and 5 days on personal matters. You then flew back to Seattle. You spent 1 day flying
in each direction.
Because only 5/21 (less than 25%) of your total time
abroad was for nonbusiness activities, you can deduct as
travel expenses what it would have cost you to make the
trip if you hadn’t engaged in any nonbusiness activity. The
amount you can deduct is the cost of the round-trip plane
fare and 16 days of non-entertainment-related meals (subject to the 50% limit), lodging, and other related expenses.
Exception 4—vacation not a major consideration.
Your trip is considered entirely for business if you can establish that a personal vacation wasn’t a major consideration, even if you have substantial control over arranging
the trip.

Travel Primarily for Business
If you travel outside the United States primarily for business but spend some of your time on other activities, you
generally can’t deduct all of your travel expenses. You can
only deduct the business portion of your cost of getting to
and from your destination. You must allocate the costs between your business and other activities to determine your
deductible amount. See Travel allocation rules, later.

To figure the deductible amount of your round-trip travel
expenses, use the following fraction. The numerator (top
number) is the total number of business days outside the
United States. The denominator (bottom number) is the
total number of business and nonbusiness days of travel.
Counting business days. Your business days include
transportation days, days your presence was required,
days you spent on business, and certain weekends and
holidays.
Transportation day. Count as a business day any day
you spend traveling to or from a business destination.
However, if because of a nonbusiness activity you don’t
travel by a direct route, your business days are the days it
would take you to travel a reasonably direct route to your
business destination. Extra days for side trips or nonbusiness activities can’t be counted as business days.
Presence required. Count as a business day any day
your presence is required at a particular place for a specific business purpose. Count it as a business day even if
you spend most of the day on nonbusiness activities.
Day spent on business. If your principal activity during working hours is the pursuit of your trade or business,
count the day as a business day. Also, count as a business day any day you are prevented from working because of circumstances beyond your control.
Certain weekends and holidays. Count weekends,
holidays, and other necessary standby days as business
days if they fall between business days. But if they follow
your business meetings or activity and you remain at your
business destination for nonbusiness or personal reasons,
don’t count them as business days.
Example 1. Your tax home is New York City. You travel
to Quebec, where you have a business meeting on Friday.
You have another meeting on the following Monday. Because your presence was required on both Friday and
Monday, they are business days. Because the weekend is
between business days, Saturday and Sunday are counted as business days. This is true even though you use the
weekend for sightseeing, visiting friends, or other nonbusiness activity.
Example 2. If, in Example 1, you had no business in
Quebec after Friday, but stayed until Monday before starting home, Saturday and Sunday would be nonbusiness
days.

Travel allocation rules. If your trip outside the United
States was primarily for business, you must allocate your
travel time on a day-to-day basis between business days
and nonbusiness days. The days you depart from and return to the United States are both counted as days outside
the United States.

Nonbusiness activity on the way to or from your
business destination. If you stopped for a vacation or
other nonbusiness activity either on the way from the United States to your business destination, or on the way
back to the United States from your business destination,
you must allocate part of your travel expenses to the nonbusiness activity.
The part you must allocate is the amount it would have
cost you to travel between the point where travel outside
the United States begins and your nonbusiness destination and a return to the point where travel outside the United States ends.

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Tip: You don’t have to allocate your travel expenses if
you meet one of the four exceptions listed earlier under
Travel considered entirely for business. In those cases,
you can deduct the total cost of getting to and from your
destination.

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You determine the nonbusiness portion of that expense
by multiplying it by a fraction. The numerator (top number)
of the fraction is the number of nonbusiness days during
your travel outside the United States, and the denominator
(bottom number) is the total number of days you spend
outside the United States.
Example. You live in New York. On May 4, you flew to
Paris to attend a business conference that began on May
5. The conference ended at noon on May 14. That evening, you flew to Dublin where you visited with friends until
the afternoon of May 21, when you flew directly home to
New York. The primary purpose for the trip was to attend
the conference.
If you hadn’t stopped in Dublin, you would have arrived
home the evening of May 14. You don’t meet any of the
exceptions that would allow you to consider your travel entirely for business. May 4 through May 14 (11 days) are
business days and May 15 through May 21 (7 days) are
nonbusiness days.
You can deduct the cost of your non-entertainment-related meals (subject to the 50% limit), lodging, and other
business-related travel expenses while in Paris.
You can’t deduct your expenses while in Dublin. You
also can’t deduct 7/18 of what it would have cost you to
travel round trip between New York and Dublin.
You paid $750 to fly from New York to Paris, $400 to fly
from Paris to Dublin, and $700 to fly from Dublin back to
New York. Round-trip airfare from New York to Dublin
would have been $1,250.
You figure the deductible part of your air travel expenses by subtracting 7/18 of the round-trip airfare and other
expenses you would have had in traveling directly between New York and Dublin ($1,250 × 7/18 = $486) from
your total expenses in traveling from New York to Paris to
Dublin and back to New York ($750 + $400 + $700 =
$1,850).
Your deductible air travel expense is $1,364 ($1,850 −
$486).
Nonbusiness activity at, near, or beyond business
destination. If you had a vacation or other nonbusiness
activity at, near, or beyond your business destination, you
must allocate part of your travel expenses to the nonbusiness activity.
The part you must allocate is the amount it would have
cost you to travel between the point where travel outside
the United States begins and your business destination
and a return to the point where travel outside the United
States ends.
You determine the nonbusiness portion of that expense
by multiplying it by a fraction. The numerator (top number)
of the fraction is the number of nonbusiness days during
your travel outside the United States, and the denominator
(bottom number) is the total number of days you spend
outside the United States.
None of your travel expenses for nonbusiness activities
at, near, or beyond your business destination are deductible.

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Example. Assume that the dates are the same as in
the previous example but that instead of going to Dublin
for your vacation, you fly to Venice, Italy, for a vacation.
You can’t deduct any part of the cost of your trip from
Paris to Venice and return to Paris. In addition, you can’t
deduct 7/18 of the airfare and other expenses from New
York to Paris and back to New York.
You can deduct 11/18 of the round-trip plane fare and
other travel expenses from New York to Paris, plus your
non-entertainment-related meals (subject to the 50%
limit), lodging, and any other business expenses you had
in Paris. (Assume these expenses total $4,939.) If the
round-trip plane fare and other travel-related expenses
(such as food during the trip) are $1,750, you can deduct
travel costs of $1,069 (11/18 × $1,750), plus the full $4,939
for the expenses you had in Paris.
Other methods. You can use another method of counting business days if you establish that it more clearly reflects the time spent on other than business activities outside the United States.

Travel Primarily for Personal Reasons
If you travel outside the United States primarily for vacation or for investment purposes, the entire cost of the trip is
a nondeductible personal expense. However, if you spend
some time attending brief professional seminars or a continuing education program, you can deduct your registration fees and other expenses you have that are directly related to your business.
Example. The university from which you graduated
has a continuing education program for members of its
alumni association. This program consists of trips to various foreign countries where academic exercises and conferences are set up to acquaint individuals in most occupations with selected facilities in several regions of the
world. However, none of the conferences are directed toward specific occupations or professions. It is up to each
participant to seek out specialists and organizational settings appropriate to their occupational interests.
Three-hour sessions are held each day over a 5-day
period at each of the selected overseas facilities where
participants can meet with individual practitioners. These
sessions are composed of a variety of activities including
workshops, mini-lectures, roleplaying, skill development,
and exercises. Professional conference directors schedule and conduct the sessions. Participants can choose
those sessions they wish to attend.
You can participate in this program because you are a
member of the alumni association. You and your family
take one of the trips. You spend about 2 hours at each of
the planned sessions. The rest of the time you go touring
and sightseeing with your family. The trip lasts less than 1
week.
Your travel expenses for the trip aren’t deductible since
the trip was primarily a vacation. However, registration
fees and any other incidental expenses you have for the
five planned sessions you attended that are directly related and beneficial to your business are deductible business expenses. These expenses should be specifically
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stated in your records to ensure proper allocation of your
deductible business expenses.

Conventions Held Outside the North
American Area

Luxury Water Travel

You can’t deduct expenses for attending a convention,
seminar, or similar meeting held outside the North American area unless:

If you travel by ocean liner, cruise ship, or other form of
luxury water transportation for business purposes, there is
a daily limit on the amount you can deduct. The limit is
twice the highest federal per diem rate allowable at the
time of your travel. (Generally, the federal per diem is the
amount paid to federal government employees for daily
living expenses when they travel away from home within
the United States for business purposes.)
Meals and entertainment. If your expenses for luxury
water travel include separately stated amounts for meals
or entertainment, those amounts are subject to the 50%
limit on non-entertainment-related meals and entertainment before you apply the daily limit. For a discussion of
the 50% limit, see chapter 2.
Not separately stated. If your meal or entertainment
charges aren’t separately stated or aren’t clearly identifiable, you don’t have to allocate any portion of the total
charge to meals or entertainment.

Exceptions
The daily limit on luxury water travel doesn’t apply to expenses you have to attend a convention, seminar, or
meeting on board a cruise ship. See Cruise Ships, later,
under Conventions.

Conventions
You can deduct your travel expenses when you attend a
convention if you can show that your attendance benefits
your trade or business. You can’t deduct the travel expenses for your family.
If the convention is for investment, political, social, or
other purposes unrelated to your trade or business, you
can’t deduct the expenses.
Caution: Your appointment or election as a delegate
doesn’t, in itself, determine whether you can deduct travel
expenses. You can deduct your travel expenses only if
your attendance is connected to your own trade or business.
Convention agenda. The convention agenda or program
generally shows the purpose of the convention. You can
show your attendance at the convention benefits your
trade or business by comparing the agenda with the official duties and responsibilities of your position. The
agenda doesn’t have to deal specifically with your official
duties and responsibilities; it will be enough if the agenda
is so related to your position that it shows your attendance
was for business purposes.

• The meeting is directly related to the active conduct of
your trade or business, and

• It is as reasonable to hold the meeting outside the

North American area as within the North American
area. See Reasonableness test, later.

If the meeting meets these requirements, you must also
satisfy the rules for deducting expenses for business trips
in general, discussed earlier under Travel Outside the United States.
North American area. The North American area includes the following locations.
American Samoa
Antigua and Barbuda
Aruba
Bahamas
Baker Island
Barbados
Bermuda
Canada
Costa Rica
Curaçao
Dominica
Dominican Republic
Grenada
Guam
Guyana
Honduras
Howland Island
Jamaica

Jarvis Island
Johnston Island
Kingman Reef
Marshall Islands
Mexico
Micronesia
Midway Islands
Northern Mariana
Islands
Palau
Palmyra Atoll
Panama
Puerto Rico
Saint Lucia
Trinidad and Tobago
USA
U.S. Virgin Islands
Wake Island

The North American area also includes U.S. islands, cays,
and reefs that are territories of the United States and not
part of the 50 states or the District of Columbia. See Revenue Ruling 2016-16, available at IRS.gov/irb/
2016-26_IRB#RR-2016-16, for more information.
Reasonableness test. The following factors are taken
into account to determine if it was as reasonable to hold
the meeting outside the North American area as within the
North American area.

• The purpose of the meeting and the activities taking
place at the meeting.

• The purposes and activities of the sponsoring organizations or groups.

• The homes of the active members of the sponsoring

organizations and the places at which other meetings
of the sponsoring organizations or groups have been
or will be held.

• Other relevant factors you may present.
Cruise Ships
You can deduct up to $2,000 per year of your expenses of
attending conventions, seminars, or similar meetings held

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on cruise ships. All ships that sail are considered cruise
ships.
You can deduct these expenses only if all of the following requirements are met.
1. The convention, seminar, or meeting is directly related
to the active conduct of your trade or business.
2. The cruise ship is a vessel registered in the United
States.
3. All of the cruise ship’s ports of call are in the United
States or in territories of the United States.
4. You attach to your return a written statement signed
by you that includes information about:
a. The total days of the trip (not including the days of
transportation to and from the cruise ship port),
b. The number of hours each day that you devoted to
scheduled business activities, and
c. A program of the scheduled business activities of
the meeting.
5. You attach to your return a written statement signed
by an officer of the organization or group sponsoring
the meeting that includes:
a. A schedule of the business activities of each day
of the meeting, and
b. The number of hours you attended the scheduled
business activities.

Entertainment
Entertainment—Defined
Entertainment includes any activity generally considered
to provide entertainment, amusement, or recreation. Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting
events; on yachts; or on hunting, fishing, vacation, and
similar trips. Entertainment may also include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their
families.
Deduction may depend on your type of business.
Your kind of business may determine if a particular activity
is considered entertainment. For example, if you are a
dress designer and have a fashion show to introduce your
new designs to store buyers, the show generally isn’t considered entertainment. This is because fashion shows are
typical in your business. But, if you are an appliance distributor and hold a fashion show for the spouses of your
retailers, the show is generally considered entertainment.
Separating costs. If you have one expense that includes the costs of entertainment and other services
(such as lodging or transportation), you must allocate that
expense between the cost of entertainment and the cost
of other services. You must have a reasonable basis for
making this allocation. For example, you must allocate
your expenses if a hotel includes entertainment in its
lounge on the same bill with your room charge.

Exceptions to the Rules

2.
Meals and Entertainment
You can no longer take a deduction for any expense related to activities generally considered entertainment,
amusement, or recreation. You can continue to deduct
50% of the cost of business meals if you (or your employee) are present and the food or beverages aren’t considered lavish or extravagant.
Tip: If food or beverages are provided during or at an
entertainment event, and the food and beverages were
purchased separately from the entertainment or the cost
of the food and beverages was stated separately from the
cost of the entertainment on one or more bills, invoices, or
receipts, you may be able to deduct the separately stated
costs as a meal expense. For more information, see Regulations section 1.274-11(d)(2), Example 2.

In general, entertainment expenses are nondeductible.
However, there are a few exceptions to the general rule,
including:

• Entertainment treated as compensation on your originally filed tax returns (and treated as wages to your
employees);

• Recreational expenses for employees such as a holiday party or a summer picnic;

• Expenses related to attending business meetings or

conventions of certain exempt organizations such as
business leagues, chambers of commerce, professional associations, etc.; and

• Entertainment sold to customers. For example, if you
run a nightclub, your expenses for the entertainment
you furnish to your customers, such as a floor show,
aren’t subject to the nondeductible rules.

Examples of Nondeductible Entertainment
Entertainment events. Generally, you can’t deduct any
expense for an entertainment event. This includes expenses for entertaining guests at nightclubs; at social, athletic,

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and sporting clubs; at theaters; at sporting events; on
yachts; or on hunting, fishing, vacation, and similar trips.
Entertainment facilities. Generally, you can’t deduct
any expense for the use of an entertainment facility. This
includes expenses for depreciation and operating costs
such as rent, utilities, maintenance, and protection.
An entertainment facility is any property you own, rent,
or use for entertainment. Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court,
bowling alley, car, airplane, apartment, hotel suite, or
home in a vacation resort.
Club dues and membership fees. You can’t deduct
dues (including initiation fees) for membership in any club
organized for business, pleasure, recreation, or other social purposes.
This rule applies to any membership organization if one
of its principal purposes is either:

• To conduct entertainment activities for members or
their guests; or

• To provide members or their guests with access to entertainment facilities, discussed later.

The purposes and activities of a club, not its name, will
determine whether or not you can deduct the dues. You
can’t deduct dues paid to:

• Country clubs,
• Golf and athletic clubs,
• Airline clubs,
• Hotel clubs, and
• Clubs operated to provide meals under circumstances
generally considered to be conducive to business discussions.

Gift or entertainment. Any item that might be considered either a gift or entertainment will generally be considered entertainment. However, if you give a customer packaged food or beverages that you intend the customer to
use at a later date, treat it as a gift.

Meals
As discussed above, entertainment expenses are generally nondeductible. However, you may continue to deduct
50% of the cost of business meals if you (or an employee)
is present and the food or beverages aren’t considered
lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant, or
similar business contact.
Food and beverages that are provided during entertainment events aren’t considered entertainment if purchased
separately from the entertainment, or if the cost of the
food and beverages is stated separately from the cost of
the entertainment on one or more bills, invoices, or receipts. However, the entertainment disallowance rule may
not be circumvented through inflating the amount charged
for food and beverages.
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Chapter 2

Other rules for meals and entertainment expenses.
Any allowed expense must be ordinary and necessary. An
ordinary expense is one that is common and accepted in
your trade or business. A necessary expense is one that is
helpful and appropriate for your business. An expense
doesn’t have to be required to be considered necessary.
Expenses must not be lavish or extravagant. An expense
isn’t considered lavish or extravagant if it is reasonable
based on the facts and circumstances.
Examples. For each example, assume that the food and
beverage expenses are ordinary and necessary expenses
under section 162(a) paid or incurred during the tax year
in carrying on a trade or business and aren’t lavish or extravagant under the circumstances. Also, assume that the
taxpayer and the business contact aren’t engaged in a
trade or business that has any relation to the entertainment activity.
Example 1. Taxpayer A invites B, a business contact,
to a baseball game. A purchases tickets for A and B to attend the game. While at the game, A buys hot dogs and
drinks for A and B. The baseball game is entertainment as
defined in Regulations section 1.274-11(b)(1)(i) and, thus,
the cost of the game tickets is an entertainment expense
and isn’t deductible by A. The cost of the hot dogs and
drinks, which are purchased separately from the game
tickets, isn’t an entertainment expense and isn’t subject to
the section 274(a)(1) disallowance. Therefore, A may deduct 50% of the expenses associated with the hot dogs
and drinks purchased at the game.
Example 2. Taxpayer C invites D, a business contact,
to a basketball game. C purchases tickets for C and D to
attend the game in a suite, where they have access to
food and beverages. The cost of the basketball game tickets, as stated on the invoice, includes the food and beverages. The basketball game is entertainment as defined in
Regulations section 1.274-11(b)(1)(i) and, thus, the cost
of the game tickets is an entertainment expense and isn’t
deductible by C. The cost of the food and beverages,
which aren’t purchased separately from the game tickets,
isn’t stated separately on the invoice. Thus, the cost of the
food and beverages is also an entertainment expense that
is subject to the section 274(a)(1) disallowance. Therefore, C may not deduct any of the expenses associated
with the basketball game.
Example 3. Assume the same facts as in Example 2,
except that the invoice for the basketball game tickets separately states the cost of the food and beverages. As in
Example 2, the basketball game is entertainment as defined in Regulations section 1.274-2(b)(1)(i) and, thus, the
cost of the game tickets, other than the cost of the food
and beverages, is an entertainment expense and isn’t deductible by C. However, the cost of the food and beverages, which is stated separately on the invoice for the
game tickets, isn’t an entertainment expense and isn’t
subject to the section 274(a)(1) disallowance. Therefore,
C may deduct 50% of the expenses associated with the
food and beverages provided at the game.

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Figure A. Does the 50% Limit Apply to Your Expenses?
There are exceptions to these rules. See Exceptions to the 50% Limit for Meals, later.
All employees and self-employed persons can use this chart.
Start Here
Were your meal and entertainment expenses reimbursed?
(Count only reimbursements your employer didn’t
include in box 1 of your Form W-2. If self-employed,
count only reimbursements from clients or customers that
aren’t included on Form 1099-MISC, Miscellaneous
Income.)

No

Yes
If an employee, did you adequately account
to your employer under an accountable plan?
If self-employed, did you provide the payer
with adequate records? (See chapter 6.)

No

Yes
Did your expenses exceed the reimbursement?
No

Yes

For the amount reimbursed...

For the excess amount...

Your meal and entertainment
expenses are NOT subject to
the limitations. However, since
the reimbursement wasn’t
treated as wages or as other
taxable income, you can’t
deduct the expenses.

Your meal expenses ARE
subject to the 50% limit.
Your entertainment
expenses are nondeductible.

50% Limit
In general, you can deduct only 50% of your business-related meal expenses, unless an exception applies. (If you
are subject to the Department of Transportation’s “hours of
service” limits, you can deduct 80% of your business-related meal expenses. See Individuals subject to “hours of
service” limits, later.)
The 50% limit applies to employees or their employers,
and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed.
Examples of meals might include:

• Meals while traveling away from home (whether eating
alone or with others) on business, or

• Meal at a business convention or business league
meeting.

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Chapter 2

Costs to include or exclude. Taxes and tips relating to a
business meal are included as a cost of the meal and are
subject to the 50% limit. However, the cost of transportation to and from the meal isn’t treated as part of the cost
and wouldn’t be subject to the limit.
Application of 50% limit. The 50% limit on meal expenses applies if the expense is otherwise deductible and
isn’t covered by one of the exceptions discussed later. Figure A can help you determine if the 50% limit applies to
you.
The 50% limit also applies to certain meal expenses
that aren’t business related. It applies to meal expenses
you have for the production of income, including rental or
royalty income. It also applies to the cost of meals included in deductible educational expenses.
When to apply the 50% limit. The 50% limit will apply
after determining the amount that would otherwise qualify
for a deduction. You first have to determine the amount of
meal expenses that would be deductible under the other
rules discussed in this publication.

Meals and Entertainment

15

Taking turns paying for meals. If a group of business
acquaintances takes turns picking up each others’ meal
checks primarily for personal reasons, without regard to
whether any business purposes are served, no member of
the group can deduct any part of the expense.
Example 1. You spend $200 (including tax and tip) for
a business meal. If $110 of that amount isn’t allowable because it is lavish and extravagant, the remaining $90 is
subject to the 50% limit. Your deduction can’t be more
than $45 (50% (0.50) × $90).
Example 2. You purchase two tickets to a concert for
$200 for you and your client. Your deduction is zero because no deduction is allowed for entertainment expenses.

Exception to the 50% Limit for Meals
Your meal expense isn’t subject to the 50% limit if the expense meets one of the following exceptions.
Exception 1—expenses treated as compensation.
In general, expenses for goods, services, and facilities, to
the extent the expenses are treated by the taxpayer, with
respect to entertainment, amusement, or recreation, as
compensation to an employee and as wages to the employee for tax purposes.
Exception 2—employee’s reimbursed expenses. If
you are an employee, you aren’t subject to the 50% limit
on expenses for which your employer reimburses you under an accountable plan. Accountable plans are discussed in chapter 6.
Exception 3—self-employed reimbursed expenses.
If you are self-employed, your deductible meal expenses
aren’t subject to the 50% limit if all of the following requirements are met.

• You have these expenses as an independent contractor.

Exception 4—recreational expenses for employees. You aren’t subject to the 50% limit for expenses for
recreational, social, or similar activities (including facilities)
such as a holiday party or a summer picnic.
Exception 5—advertising expenses. You aren’t
subject to the 50% limit if you provide meals to the general
public as a means of advertising or promoting goodwill in
the community. For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is
subject to the 50% limit.
Exception 6—sale of meals. You aren’t subject to the
50% limit if you actually sell meals to the public. For example, if you run a restaurant, your expense for the food you
furnish to your customers isn’t subject to the 50% limit.
Individuals subject to “hours of service” limits. You
can deduct a higher percentage of your meal expenses
while traveling away from your tax home if the meals take
place during or incident to any period subject to the Department of Transportation’s “hours of service” limits. The
percentage is 80%.
Individuals subject to the Department of Transportation’s “hours of service” limits include the following persons.

• Certain air transportation workers (such as pilots,

crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration
regulations.

• Interstate truck operators and bus drivers who are under Department of Transportation regulations.

• Certain railroad employees (such as engineers, con-

ductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations.

• Certain merchant mariners who are under Coast
Guard regulations.

• Your customer or client reimburses you or gives you
an allowance for these expenses in connection with
services you perform.

• You provide adequate records of these expenses to
your customer or client. (See chapter 5.)

In this case, your client or customer is subject to the
50% limit on the expenses.
Example. You are a self-employed attorney who adequately accounts for meal expenses to a client who reimburses you for these expenses. You aren’t subject to the
limitation on meal expenses. If the client can deduct the
expenses, the client is subject to the 50% limit.
If you (as an independent contractor) have expenses
for meals related to providing services for a client but don’t
adequately account for and seek reimbursement from the
client for those expenses, you are subject to the 50% limit
on non-entertainment-related meals and the entertainment-related meal expenses are nondeductible to you.

16

Chapter 3

3.
Gifts
If you give gifts in the course of your trade or business,
you may be able to deduct all or part of the cost. This
chapter explains the limits and rules for deducting the
costs of gifts.
$25 limit. You can deduct no more than $25 for business
gifts you give directly or indirectly to each person during
your tax year. A gift to a company that is intended for the
eventual personal use or benefit of a particular person or a
limited class of people will be considered an indirect gift to
that particular person or to the individuals within that class
of people who receive the gift.
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Publication 463 (2025)

If you give a gift to a member of a customer’s family, the
gift is generally considered to be an indirect gift to the customer. This rule doesn’t apply if you have a bona fide, independent business connection with that family member
and the gift isn’t intended for the customer’s eventual use.
If you and your spouse both give gifts, both of you are
treated as one taxpayer. It doesn’t matter whether you
have separate businesses, are separately employed, or
whether each of you has an independent connection with
the recipient. If a partnership gives gifts, the partnership
and the partners are treated as one taxpayer.
Example. You sell products to a local company. You
and your spouse gave the local company three gourmet
gift baskets to thank them for their business. You and your
spouse paid $80 for each gift basket, or $240 total. Three
of the local company’s executives took the gift baskets
home for their families’ use. You and your spouse have no
independent business relationship with any of the executives’ other family members. You and your spouse can deduct a total of $75 ($25 limit × 3) for the gift baskets.
Incidental costs. Incidental costs, such as engraving on
jewelry, or packaging, insuring, and mailing, are generally
not included in determining the cost of a gift for purposes
of the $25 limit.
A cost is incidental only if it doesn’t add substantial
value to the gift. For example, the cost of gift wrapping is
an incidental cost. However, the purchase of an ornamental basket for packaging fruit isn’t an incidental cost if the
value of the basket is substantial compared to the value of
the fruit.
Exceptions. The following items aren’t considered gifts
for purposes of the $25 limit.
1. An item that costs $4 or less and:
a. Has your name clearly and permanently imprinted
on the gift, and
b. Is one of a number of identical items you widely
distribute. Examples include pens, desk sets, and
plastic bags and cases.
2. Signs, display racks, or other promotional material to
be used on the business premises of the recipient.
Gift or entertainment. Any item that might be considered either a gift or entertainment will generally be considered entertainment. However, if you give a customer packaged food or beverages you intend the customer to use at
a later date, treat it as a gift.
Caution: If you are entitled to a reimbursement from
your employer but you don’t claim it, you can’t claim a deduction for the expenses to which that unclaimed reimbursement applies. This type of deduction is considered a
miscellaneous deduction that is no longer allowable due
to the suspension of miscellaneous itemized deductions
subject to the 2% floor under section 67(a).

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Chapter 4

4.
Transportation
This chapter discusses expenses you can deduct for business transportation when you aren’t traveling away from
home, as defined in chapter 1. These expenses include
the cost of transportation by air, rail, bus, taxi, etc., and the
cost of driving and maintaining your car.
Transportation expenses include the ordinary and necessary costs of all of the following.

• Getting from one workplace to another in the course of
your business or profession when you are traveling
within the city or general area that is your tax home.
Tax home is defined in chapter 1.

• Visiting clients or customers.
• Going to a business meeting away from your regular
workplace.

• Getting from your home to a temporary workplace

when you have one or more regular places of work.
These temporary workplaces can be either within the
area of your tax home or outside that area.

Transportation expenses don’t include expenses you have
while traveling away from home overnight. Those expenses are travel expenses discussed in chapter 1. However,
if you use your car while traveling away from home overnight, use the rules in this chapter to figure your car expense deduction. See Car Expenses, later.
Daily transportation expenses you incur while traveling
from home to one or more regular places of business are
generally nondeductible commuting expenses. However,
there may be exceptions to this general rule. You can deduct daily transportation expenses incurred going between your residence and a temporary work station outside the metropolitan area where you live. Also, daily
transportation expenses can be deducted if (1) you have
one or more regular work locations away from your residence; or (2) your residence is your principal place of
business and you incur expenses going between the residence and another work location in the same trade or
business, regardless of whether the work is temporary or
permanent and regardless of the distance.
Caution: If you are entitled to a reimbursement from
your employer but you don’t claim it, you can’t claim a deduction for the expenses to which that unclaimed reimbursement applies. This type of deduction is considered a
miscellaneous deduction that is no longer allowable due
to the suspension of miscellaneous itemized deductions
subject to the 2% floor under section 67(a).
Illustration of transportation expenses. Figure B illustrates the rules that apply for deducting transportation expenses when you have a regular or main job away from
your home. You may want to refer to it when deciding
whether you can deduct your transportation expenses.
Transportation

17

Figure B. When Are Transportation Expenses Deductible?
Most employees and self-employed persons can use this chart. (Don’t use this chart if your home is your principal
place of business. See Office in the home, later.)

w
Al
ay
s

Temporary
work location

de
du

Always
deductible

le
ib

ct

a
ve
ha ob
u j n
yo in io
if ma cat
le r lo
tib r o er
uc ula oth
d
g
De re t an
a

Never deductible

Home

Regular or
main job

ed

rd

ve

Ne

Always
deductible

tib

uc
le

Second job

Home: The place where you reside. Transportation expenses between your home and
your main or regular place of work are personal commuting expenses.
Regular or main job: Your principal place of business. If you have more than one job,
you must determine which one is your regular or main job. Consider the time you
spend at each, the activity you have at each, and the income you earn at each.
Temporary work location: A place where your work assignment is realistically
expected to last (and does in fact last) one year or less. Unless you have a regular
place of business, you can only deduct your transportation expenses to a temporary
work location outside your metropolitan area.
Second job: If you regularly work at two or more places in one day, whether or not
for the same employer, you can deduct your transportation expenses of getting from
one workplace to another. If you don’t go directly from your first job to your second
job, you can only deduct the transportation expenses of going directly from your first
job to your second job. You can’t deduct your transportation expenses between
your home and a second job on a day off from your main job.

Temporary work location. If you have one or more regular work locations away from your home and you commute
to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip
transportation between your home and the temporary location, regardless of distance.
If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the
employment is temporary unless there are facts and circumstances that would indicate otherwise.
If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic
expectation that the employment will last for 1 year or less,
the employment isn’t temporary, regardless of whether it
actually lasts for more than 1 year.

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Chapter 4

If employment at a work location initially is realistically
expected to last for 1 year or less, but at some later date
the employment is realistically expected to last more than
1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate
otherwise) until your expectation changes. It won’t be treated as temporary after the date you determine it will last
more than 1 year.
If the temporary work location is beyond the general
area of your regular place of work and you stay overnight,
you are traveling away from home. You may have deductible travel expenses, as discussed in chapter 1.
No regular place of work. If you have no regular place
of work but ordinarily work in the metropolitan area where

Transportation

Publication 463 (2025)

you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area.
Generally, a metropolitan area includes the area within
the city limits and the suburbs that are considered part of
that metropolitan area.
You can’t deduct daily transportation costs between
your home and temporary work sites within your metropolitan area. These are nondeductible commuting expenses.
Two places of work. If you work at two places in 1 day,
whether or not for the same employer, you can deduct the
expense of getting from one workplace to the other. However, if for some personal reason you don’t go directly
from one location to the other, you can’t deduct more than
the amount it would have cost you to go directly from the
first location to the second.
Transportation expenses you have in going between
home and a part-time job on a day off from your main job
are commuting expenses. You can’t deduct them.
Armed Forces reservists. A meeting of an Armed
Forces reserve unit is a second place of business if the
meeting is held on a day on which you work at your regular
job. You can deduct the expense of getting from one workplace to the other as just discussed under Two places of
work.
You usually can’t deduct the expense if the reserve
meeting is held on a day on which you don’t work at your
regular job. In this case, your transportation is generally a
nondeductible commuting expense. However, you can deduct your transportation expenses if the location of the
meeting is temporary and you have one or more regular
places of work.
If you ordinarily work in a particular metropolitan area
but not at any specific location and the reserve meeting is
held at a temporary location outside that metropolitan
area, you can deduct your transportation expenses.
If you travel away from home overnight to attend a
guard or reserve meeting, you can deduct your travel expenses. These expenses are discussed in chapter 1.
If you travel more than 100 miles away from home in
connection with your performance of services as a member of the reserves, you may be able to deduct some of
your reserve-related travel costs as an adjustment to
gross income rather than as an itemized deduction. For
more information, see Armed Forces Reservists Traveling
More Than 100 Miles From Home under Special Rules in
chapter 6.
Commuting expenses. You can’t deduct the costs of
taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work.
These costs are personal commuting expenses. You can’t
deduct commuting expenses no matter how far your home
is from your regular place of work. You can’t deduct commuting expenses even if you work during the commuting
trip.
Example. You sometimes use your cell phone to make
business calls while commuting to and from work. Sometimes business associates ride with you to and from work,
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Chapter 4

and you have a business discussion in the car. These activities don’t change the trip from personal to business.
You can’t deduct your commuting expenses.
Parking fees. Fees you pay to park your car at your
place of business are nondeductible commuting expenses. You can, however, deduct business-related parking
fees when visiting a customer or client.
Advertising display on car. Putting display material
that advertises your business on your car doesn’t change
the use of your car from personal use to business use. If
you use this car for commuting or other personal uses,
you still can’t deduct your expenses for those uses.
Car pools. You can’t deduct the cost of using your car
in a nonprofit car pool. Don’t include payments you receive from the passengers in your income. These payments are considered reimbursements of your expenses.
However, if you operate a car pool for a profit, you must include payments from passengers in your income. You can
then deduct your car expenses (using the rules in this
publication).
Hauling tools or instruments. Hauling tools or instruments in your car while commuting to and from work
doesn’t make your car expenses deductible. However, you
can deduct any additional costs you have for hauling tools
or instruments (such as for renting a trailer you tow with
your car).
Union members’ trips from a union hall. If you get
your work assignments at a union hall and then go to your
place of work, the costs of getting from the union hall to
your place of work are nondeductible commuting expenses. Although you need the union to get your work assignments, you are employed where you work, not where the
union hall is located.
Office in the home. If you have an office in your home
that qualifies as a principal place of business, you can deduct your daily transportation costs between your home
and another work location in the same trade or business.
(See Pub. 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business.)
Examples of deductible transportation. The following
examples show when you can deduct transportation expenses based on the location of your work and your
home.
Example 1. You regularly work in an office in the city
where you live. Your employer sends you to a 1-week
training session at a different office in the same city. You
travel directly from your home to the training location and
return each day. You can deduct the cost of your daily
round-trip transportation between your home and the
training location.
Example 2. Your principal place of business is in your
home. You can deduct the cost of round-trip transportation
between your qualifying home office and your client’s or
customer’s place of business.
Transportation

19

Example 3. You have no regular office and you don’t
have an office in your home. In this case, the location of
your first business contact inside the metropolitan area is
considered your office. Transportation expenses between
your home and this first contact are nondeductible commuting expenses. Transportation expenses between your
last business contact and your home are also nondeductible commuting expenses. While you can’t deduct the
costs of these trips, you can deduct the costs of going
from one client or customer to another.

Car Expenses
If you use your car for business purposes, you may be
able to deduct car expenses. You can generally use one of
the two following methods to figure your deductible expenses.

• Standard mileage rate.
• Actual car expenses.
Tip: If you qualify to use both methods, you may want
to figure your deduction both ways to see which gives you
a larger deduction.
The cost of using your car as an employee, whether
measured using actual expenses or the standard mileage
rate, will no longer be allowed to be claimed as an unreimbursed employee travel expense as a miscellaneous itemized deduction due to the suspension of miscellaneous
itemized deductions that are subject to the 2% floor under
section 67(a). The suspension applies to tax years beginning after 2017. Deductions for expenses that are deductible in determining adjusted gross income aren’t suspended. For example, Armed Forces reservists, qualified
performing artists, and fee-basis state or local government
officials are allowed to deduct unreimbursed employee
travel expenses as an adjustment to total income on
Schedule 1 (Form 1040), line 12.
If you use actual expenses to figure your deduction for
a car you lease, there are rules that affect the amount of
your lease payments you can deduct. See Leasing a Car,
later.
In this publication, “car” includes a van, pickup, or panel
truck. For the definition of “car” for depreciation purposes,
see Car defined under Actual Car Expenses, later.

Standard Mileage Rate
For 2025, the standard mileage rate for the cost of operating your car for business use is 70 cents ($0.70) per mile.
Caution: If you use the standard mileage rate for a
year, you can’t deduct your actual car expenses for that
year. You can’t deduct depreciation, lease payments,
maintenance and repairs, gasoline (including gasoline
taxes), oil, insurance, or vehicle registration fees. See
Choosing the standard mileage rate and Standard mileage rate not allowed, later.
20

Chapter 4

You can generally use the standard mileage rate
whether or not you are reimbursed and whether or not any
reimbursement is more or less than the amount figured
using the standard mileage rate. See chapter 6 for more
information on reimbursements.
Choosing the standard mileage rate. If you want to
use the standard mileage rate for a car you own, you must
choose to use it in the first year the car is available for use
in your business. Then, in later years, you can choose to
use either the standard mileage rate or actual expenses.
If you want to use the standard mileage rate for a car
you lease, you must use it for the entire lease period. For
leases that began on or before December 31, 1997, the
standard mileage rate must be used for the entire portion
of the lease period (including renewals) that is after 1997.
You must make the choice to use the standard mileage
rate by the due date (including extensions) of your return.
You can’t revoke the choice. However, in later years, you
can switch from the standard mileage rate to the actual expenses method. If you change to the actual expenses
method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the
car and use straight line depreciation for the car’s remaining estimated useful life, subject to depreciation limits (discussed later).
For more information about depreciation included in the
standard mileage rate, see Exception under Methods of
depreciation, later.
Standard mileage rate not allowed. You can’t use the
standard mileage rate if you:

• Use five or more cars at the same time (such as in
fleet operations);

• Claimed a depreciation deduction for the car using

any method other than straight line for the car’s estimated useful life;

• Used the Modified Accelerated Cost Recovery Sys-

tem (MACRS) (as discussed later under Depreciation
Deduction);

• Claimed a section 179 deduction (discussed later) on
the car;

• Claimed the special depreciation allowance on the
car; or

• Claimed actual car expenses after 1997 for a car you
leased.

Note: You can elect to use the standard mileage rate if
you used a car for hire (such as a taxi) unless the standard
mileage rate is otherwise not allowed, as discussed
above.
Five or more cars. If you own or lease five or more
cars that are used for business at the same time, you can’t
use the standard mileage rate for the business use of any
car. However, you may be able to deduct your actual expenses for operating each of the cars in your business.
See Actual Car Expenses, later, for information on how to
figure your deduction.
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You aren’t using five or more cars for business at the
same time if you alternate using (use at different times)
the cars for business.
The following examples illustrate the rules for when you
can and can’t use the standard mileage rate for five or
more cars.
Example 1. A salesperson owns three cars and two
vans that they alternate using for calling on their customers. The salesperson can use the standard mileage rate
for the business mileage of the three cars and the two
vans because they don’t use them at the same time.
Example 2. You and your employees use your four
pickup trucks in your landscaping business. During the
year, you traded in two of your old trucks for two newer
ones. You can use the standard mileage rate for the business mileage of all six of the trucks you owned during the
year.
Example 3. You own a repair shop and an insurance
business. You and your employees use your two pickup
trucks and van for the repair shop. You alternate using
your two cars for the insurance business. No one else
uses the cars for business purposes. You can use the
standard mileage rate for the business use of the pickup
trucks, the van, and the cars because you never have
more than four vehicles used for business at the same
time.
Example 4. You own a car and four vans that are used
in your housecleaning business. Your employees use the
vans, and you use the car to travel to various customers.
You can’t use the standard mileage rate for the car or the
vans. This is because all five vehicles are used in your
business at the same time. You must use actual expenses
for all vehicles.
Interest. You may be able to take a deduction for interest
paid on a car loan even if you use the standard mileage
rate.
You may be able to deduct qualified passenger vehicle
loan interest you paid or accrued during the year. See
Schedule 1-A (Form 1040) to see whether you can deduct
this interest.
Additionally, if you are self-employed and use your car
in your business, you can deduct that part of the interest
expense that represents your business use of the car. For
example, if you use your car 60% for business, you can
deduct 60% of the interest on Schedule C (Form 1040). If
you are self-employed and eligible to deduct interest as either qualified passenger vehicle loan interest or as business interest, you can choose to report the deduction on
either Schedule 1-A (Form 1040) or Schedule C (Form
1040), but you cannot deduct the same amount more than
once. See the Instructions for Schedule 1-A (Form 1040)
for more information.
Tip: If you use a home equity loan to purchase your
car, you may be able to deduct the interest. See Pub. 936,
Home Mortgage Interest Deduction, for more information.

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Personal property taxes. If you itemize your deductions
on Schedule A (Form 1040), you can deduct on line 5c
state and local personal property taxes on motor vehicles.
You can take this deduction even if you use the standard
mileage rate or if you don’t use the car for business.
If you are self-employed and use your car in your business, you can deduct the business part of state and local
personal property taxes on motor vehicles on Schedule C
(Form 1040) or Schedule F (Form 1040). If you itemize
your deductions, you can include the remainder of your
state and local personal property taxes on the car on
Schedule A (Form 1040).
Parking fees and tolls. In addition to using the standard
mileage rate, you can deduct any business-related parking fees and tolls. (Parking fees you pay to park your car at
your place of work are nondeductible commuting expenses.)
Sale, trade-in, or other disposition. If you sell, trade in,
or otherwise dispose of your car, you may have a gain or
loss on the transaction or an adjustment to the basis of
your new car. See Disposition of a Car, later.

Actual Car Expenses
If you don’t use the standard mileage rate, you may be
able to deduct your actual car expenses.
Actual car expenses include:
Depreciation
Licenses
Gas
Oil

Lease payments
Insurance
Garage rent
Tolls

Registration fees
Repairs
Tires
Parking fees

If you have fully depreciated a car that you still use in
your business, you can continue to claim your other actual
car expenses. Continue to keep records, as explained
later in chapter 5.
Business and personal use. If you use your car for both
business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose.
Example. You are a contractor and drive your car
20,000 miles during the year: 12,000 miles for business
use and 8,000 miles for personal use. You can claim only
60% (12,000 ÷ 20,000) of the cost of operating your car as
a business expense.
Employer-provided vehicle. If you use a vehicle provided by your employer for business purposes, you can deduct your actual unreimbursed car expenses. You can’t
use the standard mileage rate. See Vehicle Provided by
Your Employer in chapter 6.
Interest on car loans. You may be able to deduct qualified passenger vehicle loan interest you paid or accrued
during the year. See Schedule 1-A (Form 1040) to see

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whether you can deduct this interest. If you are self-employed and use your car in that business, see Interest, earlier, under Standard Mileage Rate.
Taxes paid on your car. If you are an employee, you can
deduct personal property taxes paid on your car if you
itemize deductions. Enter the amount paid on Schedule A
(Form 1040), line 5c.
Sales taxes. Generally, sales taxes on your car are
part of your car’s basis and are recovered through depreciation, discussed later.
Fines and collateral. You can’t deduct fines you pay or
collateral you forfeit for traffic violations.
Casualty and theft losses. If your car is damaged, destroyed, or stolen, you may be able to deduct part of the
loss not covered by insurance. See Pub. 547, Casualties,
Disasters, and Thefts, for information on deducting a loss
on your car.
Depreciation and section 179 deductions. Generally,
the cost of a car, plus sales tax and improvements, is a
capital expense. Because the benefits last longer than 1
year, you generally can’t deduct a capital expense. However, you can recover this cost through the section 179 deduction (the deduction allowed by section 179 of the Internal Revenue Code), special depreciation allowance, and
depreciation deductions. Depreciation allows you to recover the cost over more than 1 year by deducting part of
it each year. The section 179 deduction, special depreciation allowance, and depreciation deductions are discussed later.
Generally, there are limits on these deductions. Special
rules apply if you use your car 50% or less in your work or
business.
You can claim a section 179 deduction and use a depreciation method other than straight line only if you don’t
use the standard mileage rate to figure your business-related car expenses in the year you first place a car in service.
If, in the year you first place a car in service, you claim
either a section 179 deduction or use a depreciation
method other than straight line for its estimated useful life,
you can’t use the standard mileage rate on that car in any
future year.
Car defined. For depreciation purposes, a car is any
four-wheeled vehicle (including a truck or van) made primarily for use on public streets, roads, and highways. Its
unloaded gross vehicle weight (for trucks and vans, gross
vehicle weight) must not be more than 6,000 pounds. A
car includes any part, component, or other item physically
attached to it or usually included in the purchase price.
A car doesn’t include:

• An ambulance, hearse, or combination ambulance-hearse used directly in a business;

• A vehicle used directly in the business of transporting
persons or property for pay or hire; or

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• A truck or van that is a qualified nonpersonal use vehicle.

Qualified nonpersonal use vehicles. These are vehicles that by their nature aren’t likely to be used more
than a minimal amount for personal purposes. They include trucks and vans that have been specially modified
so that they aren’t likely to be used more than a minimal
amount for personal purposes, such as by installation of
permanent shelving and painting the vehicle to display advertising or the company’s name. Delivery trucks with
seating only for the driver, or only for the driver plus a folding jump seat, are qualified nonpersonal use vehicles.
More information. See Depreciation Deduction, later,
for more information on how to depreciate your vehicle.

Section 179 Deduction
You can elect to recover all or part of the cost of a car that
is qualifying section 179 property, up to a limit, by deducting it in the year you place the property in service. This is
the section 179 deduction. If you elect the section 179 deduction, you must reduce your depreciable basis in the car
by the amount of the section 179 deduction.
Tip: There is a limit on the total section 179 deduction,
special depreciation allowance, and depreciation deduction for cars, trucks, and vans that may reduce or eliminate
any benefit from claiming the section 179 deduction. See
Depreciation Limits, later.
You can claim the section 179 deduction only in the
year you place the car in service. For this purpose, a car is
placed in service when it is ready and available for a specifically assigned use in a trade or business. Even if you
aren’t using the property, it is in service when it is ready
and available for its specifically assigned use.
A car first used for personal purposes can’t qualify for
the deduction in a later year when its use changes to business.
Example. In 2024, you bought a new car and used it
for personal purposes. In 2025, you began to use it for
business. Changing its use to business use doesn’t qualify the cost of your car for a section 179 deduction in 2025.
However, you can claim a depreciation deduction for the
business use of the car starting in 2025. See Depreciation
Deduction, later.
More than 50% business use requirement. You must
use the property more than 50% for business to claim any
section 179 deduction. If you used the property more than
50% for business, multiply the cost of the property by the
percentage of business use. The result is the cost of the
property that can qualify for the section 179 deduction.
Example. You purchased a new car in April 2025 for
$24,500 and used it 60% for business. Based on your
business usage, the total cost of your car that qualifies for
the section 179 deduction is $14,700 ($24,500 cost ×
60% (0.60) business use). But see Limit on total section
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179, special depreciation allowance, and depreciation deduction, discussed later.
Limits. There are limits on:

• The amount of the section 179 deduction;
• The section 179 deduction for sport utility and certain
other vehicles; and

• The total amount of the section 179 deduction, special
depreciation allowance, and depreciation deduction
(discussed later) you can claim for a qualified property.

Limit on the amount of the section 179 deduction.
For tax years beginning in 2025, the total amount you can
elect to deduct under section 179 can’t be more than
$2,500,000.
If the cost of your section 179 property placed in service in tax years beginning in 2025 is over $4,000,000, you
must reduce the $2,500,000 dollar limit (but not below
zero) by the amount of cost over $4,000,000. If the cost of
your section 179 property placed in service during tax
years beginning in 2025 is $6,500,000 or more, you can’t
take a section 179 deduction.
The total amount you can deduct under section 179
each year after you apply the limits listed above cannot be
more than the taxable income from the active conduct of
any trade or business during the year.
If you are married and file a joint return, you and your
spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service.
If you and your spouse file separate returns, you are
treated as one taxpayer for the dollar limit. You must allocate the dollar limit (after any reduction) between you.
For more information on the above section 179 deduction limits, see Pub. 946, How To Depreciate Property.
Limit for sport utility and certain other vehicles.
You cannot elect to deduct more than $31,300 of the cost
of any heavy sport utility vehicle (SUV) and certain other
vehicles placed in service during the tax years beginning
in 2025. This rule applies to any four-wheeled vehicle primarily designed or used to carry passengers over public
streets, roads, or highways that isn’t subject to any of the
passenger automobile limits explained under Depreciation
Limits, later, and that is rated at more than 6,000 pounds
gross vehicle weight and not more than 14,000 pounds
gross vehicle weight. However, the $31,300 limit doesn’t
apply to any vehicle:

• Designed to have a seating capacity of more than nine
persons behind the driver’s seat;

• Equipped with a cargo area of at least 6 feet in interior

length that is an open area or is designed for use as
an open area but is enclosed by a cap and isn’t readily
accessible directly from the passenger compartment;
or

• That has an integral enclosure, fully enclosing the

driver compartment and load carrying device, doesn’t
have seating rearward of the driver’s seat, and has no

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body section protruding more than 30 inches ahead of
the leading edge of the windshield.
Limit on total section 179 deduction, special depreciation allowance, and depreciation deduction.
The depreciation limitations for passenger automobiles
acquired after September 27, 2017, and placed in service
during calendar year 2025, for which the Code section
168(k) additional first-year depreciation deduction applies
are first tax year, $20,200; second tax year, $19,600; third
tax year, $11,800; and each succeeding year, $7,060. See
Revenue Procedure 2025-16, Table 1.
The depreciation limitations for passenger automobiles
placed in service during calendar year 2025 for which no
Code section 168(k) additional first-year depreciation deduction applies are first-tax year, $12,200; second tax
year, $19,600; third tax year, $11,800; and each succeeding year, $7,060. See Revenue Procedure 2025-16, Table 2.
The limit is reduced if your business use of the vehicle
is less than 100%. See Depreciation Limits, later, for more
information.
Cost of car. For purposes of the section 179 deduction,
the cost of the car doesn’t include any amount figured by
reference to any other property held by you at any time.
For example, if you buy a car as a replacement for a car
that was stolen or that was destroyed in a casualty loss,
and you use section 1033 to determine the basis in your
replacement vehicle, your cost for purposes of the section
179 deduction doesn’t include your adjusted basis in the
relinquished car. In that case, your cost includes only the
cash you paid.
Basis of car for depreciation. The amount of the
section 179 deduction reduces your basis in your car. If
you choose the section 179 deduction, you must subtract
the amount of the deduction from the cost of your car. The
resulting amount is the basis in your car you use to figure
your depreciation deduction.
When to elect. If you want to take the section 179 deduction, you must make the election in the tax year you place
the car in service for business or work.
How to elect. Employees use Form 2106, Employee
Business Expenses, to make the election and report the
section 179 deduction. All others use Form 4562, Depreciation and Amortization, to make an election.
Caution: Form 2106 is only used by Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses. Due to the suspension of
miscellaneous itemized deductions subject to the 2% floor
under section 67(a), employees who don’t fit into one of
the listed categories may not use Form 2106.
File the appropriate form with either of the following.

• Your original tax return filed for the year the property
was placed in service (whether or not you file it
timely).

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• An amended return filed within the time prescribed by

law. An election made on an amended return must
specify the item of section 179 property to which the
election applies and the part of the cost of each such
item to be taken into account. The amended return
must also include any resulting adjustments to taxable
income.

Caution: You must keep records that show the specific
identification of each piece of qualifying section 179 property. These records must show how you acquired the
property, the person you acquired it from, and when you
placed it in service.
Revoking an election. An election (or any specification made in the election) to take a section 179 deduction
for 2025 can only be revoked with the Commissioner’s approval.
Recapture of section 179 deduction. To be eligible to
claim the section 179 deduction, you must use your car
more than 50% for business or work in the year you acquired it. If your business use of the car is 50% or less in a
later tax year during the recovery period, you have to recapture (include in income) in that later year any excess
depreciation. Any section 179 deduction claimed on the
car is included in figuring the excess depreciation. For information on this calculation, see Excess depreciation,
later in this chapter under Car Used 50% or Less for Business. For more information on recapture of a section 179
deduction, see Pub. 946.
Dispositions. If you dispose of a car on which you had
claimed the section 179 deduction, the amount of that deduction is treated as a depreciation deduction for recapture purposes. You treat any gain on the disposition of the
property as ordinary income up to the amount of the section 179 deduction and any allowable depreciation (unless
you establish the amount actually allowed). For information on the disposition of a car, see Disposition of a Car,
later. For more information on recapture of a section 179
deduction, see Pub. 946.

Special Depreciation Allowance
You may be able to claim the special depreciation allowance for your car, truck, or van if it is qualified property and
was placed in service in 2025. P.L. 119-21 (July 4, 2025),
commonly known as the One Big Beautiful Bill Act (OBBBA), made several amendments to Code section 168(k)
to provide taxpayers with a permanent 100% additional
first-year depreciation deduction for qualified property acquired and placed in service, and specified plants planted
or grafted, after January 19, 2025. Specifically, OBBBA replaced the annual phasedown of the applicable percentage for the Code section 168(k) additional first-year depreciation deduction with a permanent 100% additional
first-year depreciation deduction for qualified property acquired, or specified plants planted or grafted, after January 19, 2025. Additionally, OBBBA amended Code section
168(k) to allow taxpayers to elect to deduct 40% (60% for
certain property having longer production periods or
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certain aircraft), instead of 100%, additional first-year depreciation for qualified property placed in service, or
specified plants planted or grafted, during the first tax year
ending after January 19, 2025. The amendments generally apply to property acquired, or specified plants planted
or grafted, after January 19, 2025. See Notice 2026-11.
Combined depreciation. The depreciation limitations for
passenger automobiles acquired after September 27,
2017, and placed in service during calendar year 2025, for
which the Code section 168(k) additional first-year depreciation deduction applies are first tax year, $20,200; second tax year, $19,600; third tax year, $11,800; and each
succeeding year, $7,060. See Revenue Procedure
2025-16, Table 1.
The depreciation limitations for passenger automobiles
placed in service during calendar year 2025 for which no
Code section 168(k) additional first-year depreciation deduction applies are first tax year, $12,200; second tax
year, $19,600; third tax year, $11,800; and each succeeding year, $7,060. See Revenue Procedure 2025-16, Table 2.
Qualified car. To be qualified property eligible for the
100% additional first-year depreciation deduction, a car
(including a truck or van) acquired after January 19, 2025,
must meet all of the following tests.

• No written binding contract to acquire the car existed
before January 20, 2025.

• You acquired the car new or used.
• You placed the car in service in your trade or business.

• You used the car more than 50% in a qualified business use during the tax year.

For a car acquired before January 20, 2025, to be qualified property eligible for the 40% additional first-year depreciation deduction, the car must meet the tests listed
above, except that the car must be acquired after September 27, 2017, and no written binding contract to acquire
the car existed before September 28, 2017. Additionally,
the car must be placed in service in your trade or business
during 2025.
Election not to claim the special depreciation allowance. You can elect not to claim the special depreciation
allowance for your car, truck, or van that is qualified property. If you make this election, it applies to all 5-year property placed in service during the year.
To make this election, attach a statement to your timely
filed return (including extensions) indicating the class of
property (5-year for cars) for which you are making the
election and that you are electing not to claim the special
depreciation allowance for qualified property in that class
of property.
Caution: Unless you elect not to claim the special depreciation allowance, you must reduce the car’s adjusted
basis by the amount of the allowance, even if the allowance wasn’t claimed.
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Depreciation Deduction
If you use actual car expenses to figure your deduction for
a car you own and use in your business, yo

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Abd91d7857daa3ed9. Public record. Not legal advice.