Recent U.S. Tax and Regulatory Updates Affecting Travel Agents and Hotels (as of October 23, 2025)

Recent U.S. Tax and Regulatory Updates Affecting Travel Agents and Hotels (as of October 23, 2025)

Several developments in 2025 could impact U.S. travel agents (e.g., independent advisors, DMCs) and hotels (e.g., boutique properties, chains), particularly around deductions, compliance, and industry-specific incentives. While no seismic shifts emerged in October, the One, Big, Beautiful Bill Act (OBBBA, signed July 4, 2025) continues to ripple through hospitality, alongside IRS inflation adjustments and ongoing enforcement trends.

Below, I'll highlight the most relevant ones, focusing on practical effects, with tips for your business.

1. Tip Deduction Under OBBBA (Effective 2025-2028)

   What Changed: The OBBBA introduces a new above-the-line deduction for "qualified tips" in occupations that "customarily and regularly" receive them (e.g., hotel servers, bartenders, concierges, or tipped tour guides). Employees/self-employed can deduct reported tips (via W-2/1099) up to certain limits, reducing taxable income. IRS guidance (Rev. Proc. 2025-32, Oct. 9) lists eligible roles and defines "qualified tips."

   Impact on Hotels/Agents: Hotels with F&B or spa staff benefit most, could save tipped workers 10-22% on federal taxes, improving retention. Travel agents with tipped roles (e.g., group leaders) see similar perks. However, unreported tips remain non-deductible, risking audits.

   Action Step: Review payroll for tip reporting; integrate with Form 8027 compliance. Antravia can optimize this for payroll planning.

2. Per Diem Rates for Business Travel (Effective Oct. 1, 2025)

   What Changed: IRS per diem rates for FY 2025-2026 remain largely unchanged: Standard CONUS rate at $178/day ($110 lodging + $68 M&IE); high-cost areas up to $319. Transportation industry M&IE holds at $80 CONUS/$86 OCONUS.

   Impact: No big hikes, but steady rates aid deduction planning for FAM trips, site visits, or vendor meetings. Agents/hotels can use simplified substantiation (no receipts needed under $80/day M&IE), but IRS scrutiny on "ordinary and necessary" travel rises in 2025.

   Action Step: Update per diem policies; Antravia's travel deduction planning can audit your 2025 claims for max savings.

3. Bonus Depreciation Phase-Down (Ongoing in 2025)

   What Changed: Under TCJA extensions, bonus depreciation drops to 40% for assets placed in service in 2025 (from 60% in 2024), phasing to 20% in 2026 and 0% in 2027. OBBBA discussions may reinstate 100%, but no confirmation yet.

   Impact: Hotels upgrading rooms/HVAC or agents buying software/vehicles lose accelerated write-offs, slowing ROI on capex. Affects cost segregation studies for renovations.

   Action Step: Accelerate 2025 purchases; Antravia's depreciation service can model Section 179 alternatives (up to $1.22M limit).

4. IRS Crackdown on Travel/Meal Deductions (2025 Enforcement Focus)

   What Changed: IRS ramps up audits on tourism-related deductions, requiring stricter "business purpose" proof for meals (50% limit) and travel (100% if away overnight). OBBBA adds overtime deductions (e.g., "half" of time-and-a-half pay), but only for FLSA-compliant roles.

   Impact: Agents claiming FAM meals or hotels deducting vendor lunches face higher denial risks (up to 20% negligence penalty). Tipped overtime in hotels qualifies for new breaks.

   Action Step: Document itineraries rigorously; Antravia's audit representation can defend claims.

5. Inflation Adjustments & SALT Cap Discussions (Announced Oct. 9, 2025)

   What Changed: IRS 2026 adjustments raise standard deduction ($15,000 single) and brackets (e.g., 37% top at $609,350), but no hospitality tweaks. OBBBA proposals debate repealing/extending SALT cap ($10k limit on state/local taxes), potentially aiding high-tax state hotels (e.g., NY/CA).

   Impact: Higher brackets ease planning for profitable agents/hotels; SALT relief could save $5k+ for pass-throughs if passed.

   Action Step: Model scenarios; Antravia's state income tax planning integrates this.

Broader Implications

No game-changing October regs (e.g., no new sales tax thresholds beyond 2024 Wayfair enforcement), but OBBBA's tip/overtime deductions (guidance Oct. 9) directly boost hospitality labor costs. Antitrust suits on revenue software (e.g., pricing tools) indirectly affect taxes via potential settlements. For travel agents/hotels, focus on deduction documentation amid IRS audits—2025's theme. If these hit your ops, Antravia can audit your setup. Book a free “What’s Next” call at antravia.com

References

1. IRS. "Per Diem Rates for FY 2025-2026." September 25, 2025. https://tax.thomsonreuters.com/news/irs-announces-special-per-diem-rates-for-travel-away-from-home-beginning-october-1-2025/

2. IRS. "One, Big, Beautiful Bill Provisions: Tip Deduction Guidance (Rev. Proc. 2025-32)." October 9, 2025. https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions

3. CRI Advisors. "The OBBBA's Ripple Effect: Bonus Depreciation Restoration." September 3, 2025. https://www.criadv.com/insight/one-big-beautiful-bill-act-salt-policy-changes/

4. NKCPA. "From Flights to Meals: A Guide to Business Travel Tax Deductions." November 4, 2024 (updated for 2025 enforcement). https://www.nkcpa.com/from-flights-to-meals-a-guide-to-business-travel-tax-deductions

5. Arnold & Porter. "Key OBBBA Tax Provisions: SALT Cap Increase." July 22, 2025. https://www.arnoldporter.com/en/perspectives/advisories/2025/07/key-obbba-tax-provisions-individuals-partnerships-businesses-and-corporations

6. Bipartisan Policy Center. "SALT Deduction Changes in the One Big Beautiful Bill Act." July 30, 2025. https://bipartisanpolicy.org/explainer/salt-deduction-changes-in-the-one-big-beautiful-bill-act/

7. Tax Foundation. "FAQ: The One Big Beautiful Bill, Explained." July 23, 2025. https://taxfoundation.org/research/all/federal/one-big-beautiful-bill-act-tax-changes/

8. HCVT. "SALT Deduction Cap Increased Under OBBBA." September 3, 2025. https://www.hcvt.com/alertarticle-SALT-Deduction-Cap-Increase-Under-OBBBA

9. Mesirow. "What's New in Taxes: 2025 OBBBA Highlights." 2025. https://www.mesirow.com/wealth-knowledge-center/whats-new-taxes-2025-obbba-highlights

Disclaimer:
Content published by Antravia is provided for informational purposes only and reflects research, industry analysis, and our professional perspective. It does not constitute legal, tax, or accounting advice. Regulations vary by jurisdiction, and individual circumstances differ. Readers should seek advice from a qualified professional before making decisions that could affect their business.
See also our Disclaimer page