What Is a Tax Home? IRS Rules and Travel Deductions

A tax home, in IRS terms, is the entire city or general area where you carry on your main business or job — not the house where you and your family live. The distinction matters because the tax code only lets you deduct travel costs incurred “while away from home in the pursuit of a trade or business,” so where the IRS locates your tax home decides whether a trip is deductible business travel or an ordinary commute you pay for yourself.¹²

How the IRS Locates Your Tax Home

If you work in one place, the answer is simple. Your tax home is the city or general area of your job, regardless of where you sleep. Someone who works in Dallas and lives in Austin has a Dallas tax home, and the drive between the two is a personal commute.¹

Choosing to live far from work does not turn your residence into a business location. The rule is built around where you earn your living, not where you keep your household.

When You Work in More Than One City

If your work is split between locations, the IRS weighs three factors to decide which one is your main place of business:¹

The total time you ordinarily spend working in each location.
The level of business activity you conduct in each place.
Whether the income from each location is significant or insignificant.

Take a worker who spends eight months a year in Cincinnati earning $40,000 and four months in Miami earning $15,000. Cincinnati is the tax home because it accounts for most of the time and most of the income; trips to Miami for the seasonal job are travel away from home. The factors do not always point to the same city, so the IRS weighs them together rather than picking one. Keep records of days worked, tasks performed, and earnings tied to each location in case the classification is questioned.

When Your Home Can Be Your Tax Home

Some workers — traveling nurses, consultants covering wide territories, salespeople on the road — have no single regular workplace. If you fit that description but keep a regular residence, the IRS may treat the residence as your tax home. Three conditions apply:¹

You perform at least part of your work in the area where your home is located.
You pay for housing both at your home and at your work locations, so your travel creates real duplicate costs.
You have not abandoned the area — family members still live there, or you return regularly for personal use.

Meet all three and the residence is your tax home. Meeting only two may still work depending on the facts. Fail most of them and the IRS is likely to treat you as an itinerant.

Itinerant Workers

If you move from job to job with no main place of business and no regular residence, you are itinerant. Your tax home is wherever you happen to be working at the moment, which means you are never “away from home” for tax purposes and cannot deduct travel expenses at all. Each new job site is treated as a relocation rather than a trip from a home base.¹³

When a Temporary Assignment Moves Your Tax Home

Being sent to a new location can shift your tax home, and the dividing line is one year:²

An assignment expected to last one year or less is temporary. Your original tax home stays put, you are considered away from home, and travel expenses at the new site may be deductible.
An assignment expected to exceed one year is indefinite. Your tax home moves to the new location from the start, and expenses there are no longer travel costs.

Expectation controls, not elapsed time. If a job is initially planned for eight months but later extended past a year, your tax home shifts the moment that expectation changes, even if you have only been on site a short while.⁴

Why Your Tax Home Matters

The tax home concept only pays off if you are someone who can still deduct business travel. That group is now narrow. The Tax Cuts and Jobs Act eliminated the deduction for unreimbursed employee business expenses starting in 2018, and the One Big Beautiful Bill Act made that change permanent for 2026 and beyond. Most W-2 employees cannot deduct travel on their personal returns no matter how far they go from their tax home.⁵

A few categories of employees can still file Form 2106 and claim travel deductions: Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses.³

Self-employed people are unaffected by the change. Travel expenses are business deductions on Schedule C or Schedule F, not itemized deductions, so the tax home rules apply in full.⁶

For employees who cannot personally deduct, an employer can still reimburse travel tax-free under an accountable plan. The employee must have a business connection for each expense, substantiate it within a reasonable time, and return any excess. Reimbursements meeting those requirements are not included in wages and are not subject to income or payroll taxes.

What Counts as Deductible Travel

To be “traveling away from home,” your work must keep you away from the general area of your tax home long enough that you need to stop for sleep or rest. A same-day trip to a nearby city usually does not qualify.⁶

When the trip does qualify, deductible costs include transportation between your tax home and the destination, local travel at the destination, lodging, non-entertainment meals at 50%, and incidentals such as dry cleaning, laundry, business calls, and shipping of work materials. If you drive, you can use actual vehicle costs or the standard mileage rate — 72.5 cents per mile for 2026 — plus tolls and parking.⁶

Rather than tracking every meal and hotel receipt, you can substantiate lodging and meals using federal per diem rates. Under the 2026 high-low method inside the continental United States, the rate is $319 per day for high-cost localities and $225 for other locations, with $86 and $74 respectively allocated to meals and subject to the 50% limit.

Tax Home for Americans Working Abroad

The tax home rules also gate the foreign earned income exclusion. To claim the exclusion, your tax home must sit in a foreign country throughout your entire period of bona fide residence or physical presence abroad, and it is still identified by where you work rather than where your family lives.⁴

There is a catch. If your “abode” is in the United States, you do not have a foreign tax home even if you work full-time overseas. The IRS looks at where you maintain your family, economic, and personal ties. The only exception is for individuals serving in support of the Armed Forces in a designated combat zone.⁷

The one-year rule applies overseas the same way it applies at home. A foreign posting expected to last more than a year is indefinite and shifts your tax home abroad. A posting expected to last a year or less is temporary, your tax home stays in the U.S., and that can knock you out of the exclusion.⁴

Commuting Versus Deductible Transportation

Daily travel between your home and your regular workplace is commuting, and commuting is never deductible. A few situations that look like commuting are actually deductible transportation:³

If you have at least one regular work location and travel to a temporary site (expected to last one year or less) in the same trade or business, that travel is deductible regardless of distance.
Travel to a temporary work location outside the metropolitan area where you normally live and work is deductible.
If your home qualifies as your principal place of business, travel from home to any other work location in the same trade or business is deductible.

These lines matter for self-employed workers and the narrow group of employees still eligible to deduct. They also matter when an employer reimburses travel: the reimbursement is only tax-free under an accountable plan if the underlying trip would qualify as legitimate business travel rather than commuting.

1
Internal Revenue Service. Publication 463 (2024), Travel, Gift, and Car Expenses
2
Office of the Law Revision Counsel. 26 USC 162 Trade or Business Expenses
3
Internal Revenue Service. Instructions for Form 2106 (2025)
4
Internal Revenue Service. Foreign Earned Income Exclusion – Tax Home in Foreign Country
5
Office of the Law Revision Counsel. 26 USC 67 2-Percent Floor on Miscellaneous Itemized Deductions
6
Internal Revenue Service. Topic No. 511, Business Travel Expenses
7
Office of the Law Revision Counsel. 26 USC 911 Citizens or Residents of the United States Living Abroad