The latest amendments to the Tax Code (a.k.a. the tax cut/overhaul/reform) have rumors flying. One such rumor touched on the suspension of the deduction for employer-paid official travel expenses (26 USC Sections 132(g) and 217). Although that benefit will not be active again until 2026, 26 USC Section 912 continues to exclude official travel expenses paid by State (and all federal civilian employers) from taxpayers' gross income.
More expressly, 26 USC 912 provides that "amounts received as allowances or otherwise" are not included in gross income." Subsection (a) points to Section 901 of the Foreign Service Act (22 USC Section 4801), which authorizes the Secretary of State to pay for "the travel and related expenses of members of the [Foreign] Service and their families, including costs or expenses incurred for--(1) proceeding to and returning from assigned posts of duty..."
This combination of laws also explain why official travel costs paid by the Department like R&R and TDY (temporary duty assignments) never appear on a State Department W-2.
Special thanks to Brian Street and Trailing Houses for coming up with this solution.
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