Meals and Lodging Expense Reimbursement and Deduction

As an employee or self-employed individual who travels outside of their tax home for business purposes and stays overnight, you can have your meal and lodging expenses reimbursed without being taxed on the reimbursement, or deduct some of these expenses if you’re unreimbursed. 

This article will provide examples of these expenses and the IRS rules around reimbursing or deducting them.

If you travel for work, you might want to read more on travel expense reimbursement generally, as well as the IRS mileage reimbursement rules.

What are meal and lodging expenses?

Meal and lodging expenses are the reasonable expenses that an employee or self-employed person incurs for meals and accommodation during a business trip. 

Lodging expenses are the expenses necessary for staying overnight for business purposes outside of the employee’s or self-employed individual’s tax home.

What’s considered a tax home

A tax home is the area where your primary place of employment is located, not necessarily where you live.

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Criteria for deducting lodging expenses

Your employer can fully reimburse you for hotel or accommodation expenses without you being taxed, or you can deduct 100% of these expenses if they’re not reimbursed, as long as:

• You travel outside of your tax home
• The expenses are reasonable, ordinary, and necessary and not lavish or extravagant
• Your work necessitates staying overnight to perform your duties

You can only deduct the actual lodging costs, so keep all receipts of your expenses.

Criteria for meal reimbursement and deduction

You can generally deduct 50% of non-entertainment-related meals, whether you’re traveling or not, as long as they’re ordinary and necessary and not lavish or extravagant.

That includes food and beverages, related taxes, and tips. 

However, unlike deductible employee meal expenses, meal reimbursements are generally taxable unless you’re traveling outside of your tax home.

Business meals within your tax home are also deductible if they are ordinary and necessary.

There are instances where small business owners and self-employed people can deduct 100% of meal costs. Find out the relevant examples in our guide to meal and entertainment deductions.

Deducting at the IRS per diem rate 

Instead of deducting the actual cost of your meals, you can choose to deduct the IRS per diem allowance for meals, also known as the standard meal allowance. The IRS determines this rate, and it varies by area. Check the per diem rates depending on the location where you incur meal expenses.

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