Whether you operate as a Single-Member LLC (reporting on Schedule C) or an S Corp, the IRS rules for business travel expenses are generally the same. We’ll break down what qualifies as deductible travel, what doesn’t and how to handle payment or reimbursement depending on your tax structure.
What’s Deductible
Business travel expenses are deductible when you’re traveling away from your tax home overnight for business purposes. Your tax home is generally the city or area where your main place of business is located.
Common deductible travel expenses include:
- Airfare or other transportation to and from your business destination
- Lodging and lodging taxes
- Baggage fees
- Business-related taxi, rideshare, or car rental costs
- Tolls and parking fees
- Travel meals (subject to the 50% limitation for business meals)
How to pay:
- These expenses should be paid directly from your business account or business card when the trip is entirely for business purposes
- Mixed business and personal travel should be carefully documented, and only the business-related portion can be reimbursed by the business
Vehicle Use During Travel
If you use a personal or mixed-use vehicle for business travel, the related expenses – such as gas, insurance, or lease payments – are treated differently from other travel costs.
- The IRS allows two options for deducting vehicle use:
- Standard mileage rate (simplified method)
- Actual expense method (requires detailed tracking of costs and business-use percentage)
Because vehicles are often mixed-use assets, keep in mind, only the business-use portion is deductible.
For S Corp Tier Members:
When business travel involves driving your personal vehicle—such as traveling to an airport, client site, or overnight destination—those miles are considered business travel expenses. These costs should be paid from personal accounts, then reimbursed through the Accountable Plan in your Collective Dashboard. At this time, Collective supports the standard mileage method as this approach simplifies record-keeping and complies with IRS substantiation rules.
For LLC Tier Members (Schedule C):
Travel-related vehicle use is reported directly on your individual tax return rather than reimbursed through an accountable plan. Maintaining a detailed mileage log throughout the year is essential to substantiate your deduction during tax preparation.
For more details on how to calculate, track, and report business vehicle costs, see our article on Deducting Auto Expenses.
Generally Not Deductible
Some expenses that occur while traveling may feel business-adjacent but are not deductible under IRS rules. These include:
- Commuting between your home and your regular place of business
- Personal travel or the personal portion of a combined business/personal trip
- Family or companion travel (unless the individual is an employee traveling for a legitimate business purpose)
- Entertainment, recreation or sightseeing during business trips
- Daily local meals that do not involve overnight travel
- Fines, parking tickets, or penalties
How to handle:
- Pay these expenses personally. They should not be paid or reimbursed by your business
- For mixed-use situations like vehicles, only the business-use portion may be deductible as outlined above
Summary
Travel expenses are deductible when they are ordinary, necessary and directly related to operating your business.
- For business-only travel: Pay directly from your business account
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For vehicle use:
- S Corp Tier: Pay personally and reimburse through your Accountable Plan
- LLC Tier: Track mileage and deduct the business portion on your personal tax return
Keeping detailed records—such as mileage logs, receipts, and itineraries—ensures you can substantiate deductions and remain compliant with IRS rules.
Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as legal, financial, or tax advice. It is not intended to be a substitute for obtaining legal, accounting, or other financial advice from an appropriate and/or licensed adviser, or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.