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Would You Take a $4,000 Vacation Credit from the Government?

Would You Take a $4,000 Vacation Credit from the Government?
Joe Cortez

An Arizona senator wants to give Americans a $4,000 tax break for travel through 2021, so long as you spend the money towards a vacation within the United States. A new bill would offer the credit for qualified travel, lodging and entertainment bills, while giving destination marketing organizations a boost.

One United States senator wants to give you $4,000 to travel starting this year, as long as your trip stays within American borders. Sen. Martha McSally (R-AZ) introduced a bill on Monday, June 23, which would grant tax credits for qualified vacations in 2020 and 2021.

American TRIP Act Offers Tax Credits for Qualified Travels

Under the senator’s proposal, individual tax filers would receive up to a $4,000 tax credit per year to travel before Jan. 1, 2022. Joint filers would receive $8,000, with an additional $500 credit for dependent children.

The credits come with a number of rules. Travelers must vacation within the United States and its territories, and  must be more than 50 miles away from the traveler’s primary home. In addition, vacationers must pay for their travel, as business travel expenses don’t qualify.  While those who own a vacation home can claim transportation, food, beverage and live entertainment towards their credit, the credit can’t be used to pay the mortgage, interest or home maintenance.

If the trip qualifies, flyers can claim most of their expenses related to their vacation. This includes air travel, food and beverages, lodging, transportation, live entertainment (including sporting events), and expenses related going to business meetings and conferences. Those who choose to drive would be allowed to claim mileage at the standard rate set by the Internal Revenue Service.

Bill Wants to Jumpstart Travel Industry Recovery

In addition to the personal tax credit, the Senate bill would also earmark $50 million for destination marketing organizations to promote their locations towards flyers. McSally says the goal of the bill is to help re-awaken the travel industry hit heavily by the COVID-19 pandemic.

“The tourism and hospitality industries were among the hardest hit sectors across the country and their revival is critical to our economic recovery,” McSally said in a press release. “My legislation will help boost domestic travel and jumpstart the comeback of our hotels, entertainment sectors, local tourism agencies, and the thousands of businesses that make Arizona one of the best places in the world to visit.”

The proposal comes as the U.S. Travel Association predicts a major drop in travel spending. In a recent study, the trade organization projects American consumers will spend 40 percent less on domestic tourism, while inbound spending from foreign countries would drop by 75 percent compared to 2019.

View Comments (25)

25 Comments

  1. John Aldeborgh

    June 23, 2020 at 12:19 pm

    Yikes, the next thing we’ll hear is vacation is a human right, which needs to be guaranteed by the government. With a population of 320M the tab would be $12.8B (plus administration costs) for this new government program that would never go away like every other government program in history.

  2. RG1X

    June 23, 2020 at 3:03 pm

    Ridiculous. If you’re going to give money to the hospitality industry, give it to them directly.

  3. slomike

    June 24, 2020 at 6:41 am

    Sounds great to me. Get people back to work doing their jobs and feeling productive.

  4. PDX Duck

    June 24, 2020 at 8:05 am

    Just so I have this straight, you have a senator proposing a massive government subsidy, intended to get people to travel, in the midst of the worst pandemic in nearly 100 years? Not only that, but she is a senator from Arizona, a state known for being home to a huge number of retirees, a population which is especially at risk to die from this disease. Sure, let’s encourage people to come from other states, for unnecessary travel, acting like everything is back to normal. Can’t see that backfiring…

  5. dsellens

    June 24, 2020 at 8:14 am

    Actually just giving money directly to the the hospitality industry would just line the pockets of the owners and would do nothing for the employees. At least this idea would create jobs for the people that need it most. Not that i think it is a particularly good idea, but it is a hell of a lot better than direct subsidies to the industry.

  6. rylan

    June 24, 2020 at 8:19 am

    Not in favor of it, but if they end up giving out my tax dollars then I’ll certainly take them back.

  7. williasp

    June 24, 2020 at 9:10 am

    Wow. An $8000 vacation. That seems well in excess of what most couples would typically pay for a vacation. However, I’m happy to take a cruise to Alaska – that’s still in the USA I believe.
    Obviously, this is a dopey idea and not affordable given the debt this country already has. I’m not in favor of targeted spending. No need to pick winners and losers. Let each individual figure out the best place to spend their money.

  8. kkua

    June 24, 2020 at 9:16 am

    Awesome! So, how much is this going to add to the deficit and the country’s debt?It’s also a slippery accounting slope… kids under 2 fly for free, but older ones have to pay a full fare. But they are not eligible for the $4000 because they don’t file taxes. Good intention but very blind on the consequences.

  9. D2travel

    June 24, 2020 at 9:17 am

    What a stupid idea, taking a vacation is something you strive for, not a basic human right. Our country cannot afford this type of tax dollar giveaway, somewhere along the line common sense has to come into play.

  10. hbtr

    June 24, 2020 at 9:17 am

    The question is, how much will this incentivize people to take a trip that they would NOT have otherwise taken, vs how much would this pay for travel that they would have taken anyway? I am more in the latter category and my fear is that most people will be in that same category. Some of the proposals have suggested that the program pay 50% of expenses so it will only benefit people who are already in a position to afford some travel. Now, maybe it will have people choose to travel rather than a new TV, but I’m concerned at how much this program would cost vs how much actual benefit we would receive to our economy.

  11. ontheway

    June 24, 2020 at 9:23 am

    and once again, like the auto promotion under Obama, a gift for people who can afford to do something and poor folks lose out. It’s crazy. The travel industry made billions ripping off the american people, how come the energy surcharge never went away when their prices went down Give thm nothing.

  12. PDog

    June 24, 2020 at 10:35 am

    Sign me up. Better than giving $2400 extra per month in unemployment benefits to everyone who applied and received them.

    This will be a credit to people who travel and pay money into the economy. Won’t be everyone. And end it three/six months into 2021. Running all year is far too long.

  13. jybrick

    June 24, 2020 at 12:04 pm

    If they offer it, I’ll take it. But they shouldn’t offer it.

  14. downinit

    June 24, 2020 at 2:51 pm

    Most people I know who used to be able to itemize their taxes no longer have that option after the tax scam passed. Even $4k extra in deductions would still not make itemizing a viable option for most people. This is just another tax cut for people at the top.

  15. temecularedwing

    June 24, 2020 at 5:39 pm

    Hell yes! As a proud resident of Sedona, AZ, St. Thomas here we come!

  16. alfrie

    June 24, 2020 at 6:08 pm

    Sounds good to me. This is proposed as a tax credit, not a tax deduction, so it is not tied to income level. If it is refundable, some folks can even get some cash back instead of only reduced tax bill.

  17. TravellingITGuy

    June 24, 2020 at 9:57 pm

    As long as they prohibited the use of the deduction for any hotel charging resort/destination fees.

  18. Churnman

    June 25, 2020 at 6:22 am

    Many of us Flyertalk folks travel on points and miles. What good is a travel tax credit when I usually spend nothing for vacations. Also, like downinit said, most don’t have enough to be able to itemize anyhow. Although, it could be set up as an actual deduction for even those not itemizing. Just lower my withholding so I’d have money in my pocket since I earned that money. That would help us pay our other major tax – property tax.

  19. 7Continents

    June 25, 2020 at 6:29 am

    Agree – stooopid idea overwhelmingly agreed upon by frequent travelers who would likely benefit most. How would you ensure honesty on taxes, not to mention how much more difficult everyone’s tax return will be next year due to loss of work and unemployment benefits. Tax credits for leisure travel??

  20. gmax58

    June 25, 2020 at 10:23 am

    This is a terrible idea, not just for choosing winners and losers (as others mentioned), but just for the numbers. Assuming 200M adults at $4K each and 100M kids at $500 a piece is something like $850B credit (not deduction), which would basically double the deficit (already absurdly high).

    And on top of it, it’s a nonrefundable tax credit – so it rewards people who can afford a vacation, not people who can’t. It’s a regressive tax and bad policy.

  21. Churnman

    June 25, 2020 at 1:23 pm

    Just take the money they are just thinking about that would go toward this and give $2k to every wage earning and those on SS. That would help them buy vehicles, downpayment on housing, household goods, travel, tuition or their other taxes in their location. For some, it would help with food, utilities, rent payments, car payments… In other words, if you want to stimulate the economy, send a check and let the taxpayer decide where they should spend it. Even the Fed Reserve folks have said a future stimulus given direct to people will help the economy, improve growth, improve retailers, improve jobs. It’s going to have to be more than the last check to get attention and really thwart the recession. I realize the debt is a concern for some, but at 0% interest, the government is wise to stimulate now by giving some of our hard earned money back and that in turn creates jobs which creates a better revenue stream. If you want more eggs in the country’s basket, you’ve got to feed the chickens – this is not the time for a diet. This also betters people’s lives which leads to better nutrition which leads to better health which leads to less strain on the healthcare system and then some can choose to travel. They will travel because they’ve been in lockdown and going stir crazy. That’s a better recipe for those in the travel industry.

  22. ranles

    June 26, 2020 at 1:14 pm

    If it is a tax credit, I feel a mileage run in the offing for FT Members to accumulate FF miles, on taxpayers. Sad.

  23. jjmoore

    June 26, 2020 at 6:45 pm

    I hate this idea of a government subsidy to the tourism industry. At the end of the day, it is taxpayer money hundreds of billions of $$, mind you!!). I would vote against this every step of the way. If it passes, however, I am not going to decline, but will certainly look for ways to utilize that money towards tourism outfits that could benefit from it (not just staying at a huge corporation Marriott hotel, for instance).

  24. thebug622

    June 29, 2020 at 11:14 am

    So China is going to lend us the money to go on vacation and our grandchildren will need to pay for it?Its no wonder Mcsally will be losing the next election to a dem,this is a terrible idea from a poorly run government

  25. cairns

    June 30, 2020 at 1:14 pm

    Never underestimate the stupidity of Congress.

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