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Business Travel Expenses Managing Costs Tax Deductions and Best Practices for Corporate Travel

Publication date (27 April 2025)

Business travel has become a vital part of operations for many organizations. Employees often travel for business to visit other branches, participate in conferences and trade shows, or meet with partners face-to-face.

Recent studies show that more employees are excited about business trips. They see them as a chance to visit new places, meet new people for work, and even enjoy some free time during the trip.

Still, managing travel expenses can be tricky. For employers, the many details involved make it a critical area that can’t be ignored.

This guide will take you through the key steps for handling travel expenses efficiently—from planning the trip to submitting the final expense report.

What is a travel expense?

Travel expenses are the costs an employee has when traveling for work. These usually include:

Transport and travel: money spent on flights, trains, or car rides.
Accommodation: the cost of staying in hotels, rented apartments, or short-term places.
Meals and small daily costs: spending on food, drinks, tips, and things like laundry.
Local travel: using taxis, rental cars, buses, or ride apps like Uber.
Other costs: extra charges like internet access, parking, or fees to attend events or meetings.

Why is it important to manage travel expenses well?

If travel spending isn’t controlled, it can get out of hand and waste money. This is a big problem, especially for companies that need to watch every penny.

Managing travel expenses properly helps businesses stick to their rules, avoid fraud, and keep a clear view of their financial situation. It also makes things easier for employees, so they don’t have to worry about losing receipts or getting paid back late.

Without good control, travel costs can become a major burden. Spending too much can break the budget, make it hard to track payments, and create confusion.

Many companies still manage expenses by hand, but this can lead to mistakes, missing receipts, and slow payments.

IRS & Global Guidelines for Business Travel Deductions

Whether someone travels for work once a year or every month, figuring out which travel costs can be written off on taxes can be confusing. The IRS has helpful information for all business travelers to claim these tax savings correctly.

Notes:

You can claim business travel expenses on your taxes if you travel away from your usual work area and need to stay overnight for work reasons.
The expenses must be normal and necessary for your job. You can’t write off anything personal or overly fancy.
Companies can write off travel costs for employees working in a different location, as long as the assignment is temporary (less than one year).
You can also write off the cost of attending a work-related conference or event. If the event is outside North America, there are special rules.

Travel Costs You Can Deduct:

Flights, buses, trains, or car travel to and from the business location.
Taxis, rideshares, or other transportation between airports, hotels, and work locations.
Shipping luggage or work materials between locations.
Using your own car for work trips.
Hotel stays and meals.
Laundry and dry cleaning while traveling.
Business phone calls and internet.
Tips for services related to travel.
Other reasonable and necessary travel-related expenses.

For Self-Employed People and Farmers:

If you’re self-employed, you can write off travel costs on Schedule C of your tax return.
Farmers use Schedule F for the same purpose.

For National Guard or Military Reserves:

Members can deduct travel costs they paid themselves while on duty if not reimbursed.

To make tax filing easier, keep receipts, canceled checks, or any paperwork that proves your travel expenses.

Expense Policy & Reimbursement Best Practices

Starting Steps for Creating an Employee Expense Reimbursement Policy

Before writing your policy, take time to plan and gather important information.

This will help you create a policy that fits your company well.

Think About Your Business Needs

What’s your budget for travel and other work expenses?
Do you use any software to track and manage expenses?
A good policy and system can save time and money in the long run.

Align with Your Company’s Values

Make sure your policy matches your company’s goals and values.

For example, if your business cares about sustainability, include rules that support eco-friendly travel and expense choices.

Consider What Employees Want

Think about what matters to your team.

For example, flexibility is important to many workers today. While it often refers to hours and location, you can also include flexible options in how expenses are handled—like offering different ways to submit receipts or book travel.

Work with Others

Talk to key people in your company while creating the policy.

Get input from:

Employees who travel often.
Finance and HR teams.
Managers or department leads.

Their feedback can help you build a more effective and realistic policy.

Best Practices for a Simple and Clear Expense Reimbursement Policy

Once you’ve set the basics of your reimbursement policy, these tips will help make it work smoothly:

Clearly List What Expenses Are Allowed

Your policy should explain what types of costs can be paid back to employees and what the limits are.

For example:

You might give a daily limit (like $55) for meals during business trips.
You can also set rules about hotel types or flight classes (like only economy class or specific hotels with business rates).

Ask for Receipts

Make sure your policy says that receipts are needed for all expenses.

These can include:

Store or restaurant receipts.
Email receipts.
Booking confirmations from websites.

Tell employees how to submit them—such as by scanning or taking a photo to upload to your expense system.

Cut Down on Paperwork

Use digital forms instead of paper.

Explain which templates to use and how to send in expense reports.

Digital systems are faster, safer, and less likely to lose documents.

Set Deadlines for Submitting Expenses

Sometimes, employees forget to submit their expenses quickly.

This can mess up accounting and hurt tax reporting.

Include a clear deadline—like “submit expenses within 30 days.”

Create a Clear Approval Process

Explain how expense reports get approved:

Who needs to approve them.
What amounts can be approved automatically (if using software).
Make sure people can’t approve their own expenses.

Do Regular Checks (Audits)

To keep things fair and honest, do random checks on expenses.

You could:

Audit every third report.
Check any reports over a certain amount.

Say who does the audits and make sure it applies to everyone equally.

How to Track Business Travel Expenses Effectively

Managing business travel costs can be tricky, but these tips can help you stay on budget and make the process smoother:

Plan Ahead When Possible

Last-minute travel can get expensive. Try to book flights and hotels early to get better rates or promotions. If you’re flexible with travel dates, you may also find cheaper options depending on demand.

Explore Different Travel Options

Big airports are convenient but often more expensive. Consider flying into smaller airports or taking flights with layovers—they might be cheaper, even if less convenient.

Also, don’t forget about trains. They can be slower but are often cheaper and let you get work done during the trip.

Look at the Big Picture

Instead of just comparing individual prices (like just the flight), consider the total cost of the trip.

For example, cheaper flights might mean more expensive hotels or longer (and costlier) commutes from the airport. A full cost comparison helps make better decisions.

Decide If a Corporate Travel Agency Is Worth It

Big companies often use travel agencies to handle bookings. They may get better deals and save employees time.

But travel agencies charge fees and might not always have the lowest prices. If your company doesn’t travel often, it might be cheaper to book directly.

Use Travel eSIMs Instead of Data Roaming

Data roaming is easy but expensive. Travel eSIMs are a smart and cheaper option—saving up to 75%.

They’re easy to install with a QR code and let travelers stay connected without changing SIM cards. Businesses can also buy and manage them from one place, making it easier to track spending.

Simplify Expense Management

Tracking expenses manually can be a hassle. Look for tools that make it easier, like apps or systems where employees can submit claims quickly.

You can also use platforms that handle specific costs—like eSIM portals—to reduce paperwork and manage budgets better.

Business Travel Budgeting & Forecasting

A well-planned travel budget helps you track costs, make informed decisions, and avoid overspending.

Here’s how to create a business travel budget effectively:

Identify Your Company’s Travel Goals

Start by understanding why business travel is important for your company. What do you hope to achieve through business travel? Whether it’s expanding to new markets, attending conferences, or building relationships with clients, clearly define the objectives. Align these goals with measurable results, like:

Sales targets.
Number of clients acquired.
Partnerships formed.

Setting clear travel goals helps you justify and allocate the budget effectively.

Review Past Travel Data

Look at past travel expenses to predict future costs. Check the average cost and length of trips, and break down the costs into categories like:

Conference fees.
Hotel costs.
Airfare.
Meals or per diems.
Transportation (rental cars, public transit, etc).
Visa and insurance costs.

Knowing past spending helps you create a more accurate budget and plan for peak travel times.

Consider External Factors

Remember that several external factors can affect travel costs:

Economic conditions: Things like fuel prices or exchange rates.
Seasonal demand: Prices can increase during peak travel seasons.
Industry events: Major conferences may increase travel demand.
Travel regulations: Changes in visa rules or security protocols can add fees.
Geopolitical factors: Events like political instability or natural disasters can affect safety and costs.

Factor these elements into your travel planning to avoid unexpected expenses.

Create a Business Travel Policy

A travel policy helps ensure employees follow guidelines and keeps expenses manageable. A good policy should:

Outline what expenses are covered.
Set clear travel booking and approval processes.
Explain how to submit expense reports and get reimbursed.

This policy ensures employees know what’s acceptable and helps them stick to the budget.

Monitor and Control Expenses

Once your budget is in place, track actual spending and compare it to the plan. This will help spot any overspending and help you adjust for future trips. Here are some tips to keep costs down:

Book early: Airfares are generally cheaper when booked in advance.
Use public transportation: It’s often cheaper than renting cars or using rideshare services.
Opt for flexible bookings: This allows refunds if travel plans change.
Set upgrade limits: Ensure employees know when upgrades are allowed (e.g., for longer flights).
Use travel apps: Travel management apps help employees book and manage trips easily.

Corporate travel management companies can also help secure discounts on hotels and flights, further saving costs.

What Is a Reasonable Business Travel Budget?

Determining a reasonable budget for business travel depends on several factors, such as the company’s size, industry, travel goals, destinations, and employee roles.

Here are key points to consider when setting a reasonable business travel budget:

Industry Standards: Look into typical travel budgets within your industry by researching benchmarks and best practices.
Travel Objectives: Different travel activities require different budgets. For example, attending a national conference will likely need a larger budget than a local client meeting.
Cost of Living: Consider the cost of living in the destinations your employees are traveling to. Meal costs in cities like New York will be higher than in places like Nashville, so your per diem may need adjusting.
Employee Roles: Senior executives or employees with higher responsibilities may need a larger travel budget to cover things like client entertainment or premium travel and accommodations.

Ultimately, a reasonable business travel budget should balance the company’s needs with sound financial management. Be sure to regularly review and adjust the budget as needed based on feedback, industry trends, and changing business needs.

How to Save on Business Travel Expenses

There are 10 Effective Ways to Save on Business Travel Expenses

Tighten Up Your Business Travel Policy

Review and update your business travel policy to ensure it covers all aspects of travel, including bookings, meals, and on-site spending.

Implement a proper approval process, clear booking guidelines, and clear reimbursement protocols.

A well-defined policy can prevent overspending and ensure that employees adhere to set budget limits.

Have a Pre-trip Approval Process

Set up a formal approval process for all travel bookings to ensure that trips are justified before being booked. This prevents unnecessary bookings and avoids wasted expenditure.

If using a travel management company, utilize their online booking tools, which often include an approval system for better monitoring of compliance with company policies.

Save on Airline Flights

Encourage employees to be flexible with their travel dates and flight choices to secure better prices. Book economy flights where possible, and consider requiring flexible tickets only when absolutely necessary. Leverage software tools that alert you to airfare promotions and discounts. AI-powered tools can automatically rebook cheaper flights, saving up to $150 per ticket.

Cut the Cost of Hotels

Hotel prices can vary significantly, even at the same property. Set budget thresholds for room rates and specify room types, such as standard rooms only. If your employees travel to the same locations often, negotiate special rates with hotels. Also, use price optimization tools to automatically rebook hotels when rates drop, potentially saving $100 per stay.

Consider Bleisure Travel

Bleisure (business + leisure) travel can reduce overall travel costs by offering more flexibility.

Allow employees to extend business trips for personal reasons, which often results in cheaper flights and accommodations.

This trend is growing, especially as companies recognize the benefits of employee well-being and retention.

Explore Trip Batching

Instead of booking individual trips, consider batching multiple trips in the same region.

This strategy reduces both travel expenses and the carbon footprint by consolidating trips to nearby locations. It also saves time by minimizing unnecessary travel days.

Understand Ancillary Charges

Be aware of additional costs such as Wi-Fi fees, parking, and baggage charges.

Work with service providers who bundle these extra fees into one comprehensive package.

This will help you stay within your budget and prevent unexpected costs from accumulating at the end of a trip.

Help Your Employees Be More Productive on the Road

Minimize the time employees spend managing logistics and maximize their productivity.

Use apps and software that sync travel schedules with personal calendars, provide real-time updates, and deliver safety alerts.

This not only helps employees manage their time effectively but also ensures they remain safe and productive throughout their travel.

Partner for Travel Optimization

Work with a travel management company to gain access to preferential rates, industry expertise, and advanced travel optimization tools.

These companies offer customized travel management programs that provide visibility into travel expenses, helping you make informed decisions and identify cost-saving opportunities.

Reward Your Employees – and Your Business

Encourage employees to book cost-effective travel options by offering incentives such as gift vouchers, time off, or a share of the savings.

Additionally, participate in business reward programs that offer points for each booking, which can be redeemed for discounts on future travel, upgrades, and other services.

By implementing these strategies, companies can significantly reduce their business travel expenses while maintaining employee satisfaction and productivity.

Tightening policies, embracing technology, and fostering a culture of cost-consciousness can go a long way in optimizing travel costs without compromising on business objectives.

Legal & Compliance Considerations for Business Travel

Business travel plays an essential role in a company’s operations, but it also brings a variety of legal and compliance challenges.

Ensuring adherence to relevant laws is vital to protect both employees and employers from legal complications.

Below are some of the most critical legal considerations businesses should keep in mind when managing business travel:

Employment Rights

Travel Expectations:

Employment contracts should clearly outline expectations for business travel, including when travel is required, how long employees will be away, and the reimbursement of travel expenses.

Employees must understand their rights related to business trips, such as working hours, compensation, and how travel costs will be managed.

Domestic and International Employment Laws:

Employees have the same employment rights while traveling for work, both domestically and internationally.

This includes ensuring that employees are treated fairly and receive appropriate compensation for time spent traveling. Failure to uphold these rights can lead to legal claims.

Safety Standards

Employer’s Duty of Care:

Employers are legally obligated to ensure the safety and well-being of employees traveling for business.

This includes conducting risk assessments for potential hazards at the destination, whether domestic or international.

Health & Safety Compliance:

Employers must adhere to local and international health and safety regulations, including providing travel risk assessments, emergency procedures, and adequate training for employees traveling to higher-risk destinations.

Political Conflict and Unsafe Destinations:

Travel to regions with political instability, health risks, or natural disasters should be carefully considered. Employers must ensure they are taking all necessary precautions and providing adequate support to employees.

Tax Implications

Tax Liability on Business Travel:

Employees and employers should understand the tax implications of business travel, particularly for international trips.

Some of the tax issues to consider include:

Permanent Establishment Risk: If employees conduct substantial business activities while abroad, it could trigger tax obligations for the company in the destination country.
Personal Income Tax: Long-term business trips might create personal tax liabilities for employees, especially if the trip exceeds a certain duration.
Social Security and Corporate Taxes: Extended business travel may also affect the company’s social security contributions or result in corporate tax exposure.

Expense Allocation:

Properly distinguishing between personal and business expenses is critical to avoid tax complications and ensure that reimbursement processes comply with tax laws.

Visa Requirements

Proper Documentation:

Before sending employees abroad, companies must ensure that all visa and passport requirements are met. In some countries, working on a tourist visa is prohibited and could lead to legal issues, including fines, deportation, or being banned from re-entering the country.

Visa Types:

Employees must obtain the appropriate business visa, if required, and understand the activities they are legally allowed to engage in while abroad under visa-free travel. This may also involve complying with maximum stay durations.

Ensuring Valid Passports:

Always check that employee passports are valid for at least six months beyond their intended travel dates to avoid travel disruptions.

Business Travel Policy

Comprehensive Travel Policy:

A clearly defined travel policy is critical for managing business travel legally and efficiently. This policy should include safety regulations, permissible expenses, booking procedures, and guidelines tailored to specific travel destinations.

Duty of Care:

The company has a legal duty to ensure employees’ health, safety, and well-being while they are traveling for business.

The travel policy should:

Include travel risk assessments.
Provide emergency contact information and procedures.
Arrange appropriate travel insurance.
Offer 24/7 support in case of emergencies.
Ensure employees have access to safe and suitable accommodations.
Address inclusivity for employees requiring additional care.

Travel Expenses

Clear Reimbursement Guidelines:

It’s essential for employers to define which travel expenses will be reimbursed and establish clear limits to avoid misunderstandings and disputes.

The business travel policy should include the following categories of expenses:

Transportation Costs: Flights, car rentals, taxis, and public transportation.
Accommodation Costs: Hotel stays and lodging arrangements.
Meal Expenses: Meal per diems or reimbursement for dining expenses during business trips.

Avoiding Disputes:

A well-communicated expense policy helps prevent confusion and potential legal claims related to travel reimbursements.

Data Protection Regulations

GDPR Compliance:

Business travelers must ensure compliance with data protection laws, such as the General Data Protection Regulation (GDPR), when handling sensitive data while traveling.

This includes ensuring that personal and customer data is secure, especially when traveling internationally.

Protecting Sensitive Information:

Business travelers should take precautions when accessing or storing confidential information, such as using encrypted devices and secure networks to prevent data breaches.

Local Privacy Regulations:

Ensure employees understand local data privacy regulations in the destination country, as data protection laws can vary widely between jurisdictions. If a data breach occurs, it should be reported immediately as per legal requirements.

Understanding and adhering to these legal and compliance considerations is critical for businesses managing employee travel.

Employers must ensure clear communication, establish robust travel policies, and maintain compliance with relevant laws to protect both the organization and employees during business travel.

This not only minimizes legal risks but also fosters a safer and more efficient travel environment for employees.

FAQs:

Can I Deduct Travel Expenses for a Combined Business + Personal Trip?

Yes, it is possible to deduct travel expenses for a combined business and personal trip, but there are specific rules and limitations that must be followed. The IRS (in the U.S.) allows you to deduct only the portion of the trip that is related to business purposes, not the personal portion.

What if I lost a receipt for a business expense?

make sure you have other proof of the transaction, either on a bank statement or as detailed notes. You need to be able to demonstrate that the expense is solely for business use and that the amounts have been recorded and calculated accurately.

Are Travel Expenses Taxed as Income?

Travel expenses reimbursed by an employer are generally not taxed as income. If the travel is for business purposes and complies with IRS guidelines (such as being ordinary, necessary, and directly related to the job), the reimbursement is typically not taxable.

However, if the travel includes personal activities or the expenses exceed the actual costs, the excess may be considered taxable income. Additionally, if employees receive travel stipends or allowances that don’t directly correspond to actual expenses, they could be taxed.