Travel Tax Credit: Will Uncle Sam Pay You to Take a Vacation?
There's a proposal in Congress to give you an "Explore America" tax credit of $4,000 or more to cover travel expenses. But don't pack your bags quite yet.


After being cooped up for months at home, who doesn't want to pack their bags and take a vacation? I certainly could use some time lounging on the beach or hiking up a mountain. And the travel industry wants us all to take a trip somewhere, too. Airlines, hotels, restaurants, and other businesses that rely on vacationers have been in the dumps during the coronavirus pandemic. They're looking for anything that will boost their bottom line.
So, how then do you make it easier for Americans to take a vacation and save the travel industry at the same time? How about a tax credit! That's the idea behind a bill introduced in Congress by Sen. Martha McSally (R-AZ). The American Tax Rebate and Incentive Program (TRIP) Act would provide a tax credit of up to $4,000 ($8,000 for married couples filing a joint return), plus an additional $500 for each child age 16 or younger, for your domestic travel expenses. (The credit is also being called the Explore America Tax Credit.)
What Expenses Would Be Eligible for the Credit?
Under the plan, you could claim a tax credit (up to the applicable amount mentioned above) for travel expenses related to:

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
- Food and beverages;
- Lodging;
- Transportation;
- Live entertainment (including sporting events); or
- Attending a conference or business meeting.
So, your meals and hotel expenses on vacation would be covered. You could even get a credit for your margaritas at the tiki bar. If you fly to your destination, airfare would be counted. If you drive your own car, you could claim the standard mileage rate for business travel as a credit (57.5¢ per mile in 2020). If you rent a car, the rental fee would be added to the total. Going to a show, no problem. Theme park tickets would probably be allowed as well.
There would be a couple of exceptions, though. For example, if you stay at your own vacation home, costs associated with that home (mortgage, interest, maintenance, etc.) would not count as lodging expenses. Any expenses that are also deductible as a business expense would not be eligible for the credit, either.
Where and When Can You Go?
To claim the credit, you would have to travel within the U.S. (including any U.S. territory or possession). Your final destination would also have to be at least 50 miles from your home. In addition, the credit would only be available for travel in 2020 and 2021.
What Are the Chances This Will Pass?
Before you book a trip, you should know that the chances of this bill ever becoming law are slim. President Trump has called for legislation to help the travel industry, and a few Republican senators like the general idea of a travel credit, but at this point the TRIP Act doesn't have widespread support in Congress.
As legislators hash out another stimulus package, a travel credit of some sort could make it's way into a final bill – but don't count on it. So, while you may be dreaming of the vacation of a lifetime, don't pack your bags just yet.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Rocky Mengle was a Senior Tax Editor for Kiplinger from October 2018 to January 2023 with more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, Rocky worked for Wolters Kluwer Tax & Accounting, and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky holds a law degree from the University of Connecticut and a B.A. in History from Salisbury University.
-
Amazon Resale: Where Amazon Prime Returns Become Your Online Bargains
Feature Amazon Resale products may have some imperfections, but that often leads to wildly discounted prices.
-
IRS Watchdog: Three Problems the IRS Must Address in 2025
IRS The tax season is over, but new changes to the IRS can pose risks to your taxpayer experience.
-
Elon Musk and Most Taxpayers Don't Like What's in Trump's 'Big Beautiful Bill'
Tax Policy President Trump is betting big on his newest tax cuts being passed by July 4. But not everyone is on board.
-
2025 SALT Cap Could Hurt Top 'Hidden Home Cost'
Tax Deductions The latest GOP tax bill might make hidden homeowner costs worse for you. Here’s how.
-
No Social Security Tax Cuts in Trump’s 'Big Bill'? What Retirees Need to Know
Tax Policy Eliminating taxes on Social Security benefits is missing from President Trump’s proposed tax overhaul. Here’s why and what an alternative offering could mean for retirement taxes.
-
Retire in the Bahamas With These Three Tax Benefits
Retirement Taxes Retirement in the Bahamas may be worth considering for high-net-worth individuals who hate paying taxes on income and capital gains.
-
Five Surprising GOP Senate Bill Tax Changes to Know
Tax Policy Senate Republicans proposed tax changes for Trump’s ‘one big, beautiful bill.” Some provisions have stirred debate.
-
Senate Approves $6,000 'Bonus' Tax Deduction for Those Age 65 and Older
Tax Reform Under Trump’s ‘big bill,’ the U.S. Senate has proposed a larger bonus tax deduction for older adults than the House. Will it be enacted?
-
2025 Virginia Tax Rebate Checks Coming Soon? What to Know Now
Tax Rebates Given a historic 2025 gubernatorial race, tax policy will remain a key issue for Virginians in the months ahead.
-
Don't Miss These Four Tax Breaks for Americans Living Abroad in 2025
International Tax U.S. expats can reduce their tax burden by taking advantage of a handful of tax credits and deductions.