Can you deduct Destination Trips? What the IRS Really Says

Can Travel Agents actually deduct destination Research Trips?

Following our original blog on tax deductions for travel agents, and questions we have received in our inbox, Antravia has written this blog to provide further guidance on this topic. Which is certainly our most asked question!

Many travel advisors and agency owners want to know if they can deduct the cost of traveling to experience a destination they plan to sell.. so whether it is trekking to see elephants in Thailand or scouting resorts in Greece. The logic seems straightforward: visiting these locations builds knowledge, and knowledge drives sales and clients like to deal with knowledgeable agents.

So what does the IRS say? So, under IRS Publication 463 and Internal Revenue Code Section 162, most of these trips do not qualify as deductible business travel unless strict conditions are met. Here’s what the IRS actually says, and what it means for you and your agency.

What the IRS Says about travel expenses

The IRS is clear in Publication 463 (Travel, Gift, and Car Expenses):

“To deduct travel expenses, you must be traveling away from your tax home in pursuit of your trade or business. You must be able to substantiate the business purpose of the travel and that the expenses are ordinary and necessary.”

And:

“You cannot deduct travel expenses for a trip that is primarily for personal purposes. If your travel is primarily for business but you engage in some personal activities, you can deduct the business portion. If your travel is primarily personal, none of the travel costs are deductible even if you conduct some incidental business.”

For foreign travel, the IRS also adds:

“If you travel outside the United States and spend the entire time on business, you can deduct all your travel expenses. If you spend part of the time on personal activities, you generally can only deduct the business-related portion unless you meet one of the exceptions.”

So what counts as Business Travel?

The IRS requires that you demonstrate a clear, prearranged business purpose. Examples that meet the standard include:

• Attending a conference, trade event, or industry seminar

• Meeting with suppliers, DMCs, or hotel partners to negotiate contracts

• Traveling as part of an invited, documented FAM (familiarization) trip with a structured itinerary
  
  

Simply traveling to “experience” activities or hotels, even if it will help you sell later, does not qualify unless the trip is formally organized around business activity and you have proof: itineraries, agendas, meeting notes, and evidence of the business benefit. We always tell our clients to keep full proof, or send to us as they go along!

The Primary Purpose Test for Foreign Travel - What does the IRS actually say?

For international trips, the IRS applies the primary purpose test. If the trip you are going on is more than 50% for business (counting travel days as business if they are directly tied to the work), you may deduct the airfare and the business-related expenses.

If the trip is primarily personal, none of the airfare is deductible, even if you conduct some business while there. You can only deduct the direct costs of the actual business activities, such as meeting a supplier, and only with full proof.

The IRS specifically notes:

“If you travel outside the United States primarily for vacation or other personal purposes, the entire cost of the trip is a nondeductible personal expense, even if you engage in some incidental business activities.”

The “25 Percent Rule” myth

Some advisors believe that if personal time is less than 25% of the trip, they can deduct the rest. This is incorrect. The IRS uses the 50% primary purpose test and requires that each business activity be documented and necessary to your trade or business. There is no automatic safe harbor based on a percentage.

What about research trips?

Seeing elephants in Thailand or experiencing a river cruise in Europe may help you sell, but unless those activities are part of a documented supplier FAM or you are attending scheduled business meetings, they are treated as personal travel.

You may be able to deduct specific expenses if you schedule formal meetings with local suppliers and document those interactions, including time, date, participants, and the business conducted, but the broader cost of the trip, including airfare, lodging, and tours, is almost never deductible unless the trip meets the primary purpose and substantiation tests.

How to make a trip deductible

If you want to make destination research trips legitimate business travel:

1. Work with suppliers or associations to attend structured FAMs or trade events.

2. Document everything: keep itineraries, contracts, meeting notes, and business cards.

3. Ensure the majority of your days are spent on scheduled business activities so that the trip’s primary purpose is business.

4. Separate personal and business costs clearly. If you add personal days, track those costs and exclude them.
   
   

Why does this matters?

The IRS has tightened scrutiny on travel deductions, particularly for sole proprietors and independent contractors, where personal travel is often reclassified as non-deductible. Failure to document can lead to denied deductions and penalties.

For travel agents and hoteliers, treating “research” trips like any other business investment.. with structure, proof, and a clear link to income generation is, therefore, essential.

Final word from Antravia

A personal safari trekking trip, even with some supplier conversations, is unlikely to qualify as deductible. But a structured business itinerary, documented meetings, or a supplier sponsored FAM can change the outcome.

If you’re unsure, speak with a tax professional. Antravia works with travel agents and hoteliers to navigate these rules, ensuring your travel deductions are maximized without risking compliance.