Vacation Tax Credit: What to Know

As the coronavirus pandemic continues to affect nearly every aspect of society, there have been many conversations surrounding a possible second stimulus package. If there does end up being another stimulus package, there is a chance that it could include a vacation tax credit. What would this tax credit entail?

According to WUSA, there could be a $4,000 travel tax credit for eligible Americans that would help give a boost to the hospitality industry. The publication even noted that this tax credit is one that President Donald Trump brought up during a roundtable discussion at the White House in May. "Create an 'Explore America' — that's 'Explore,' right? 'Explore America' tax credit that Americans can use for domestic travel, including visits to restaurants. That's a big deal," Trump reportedly said, per a White House transcript. The president did not give a dollar amount to this tax credit, but numerous sources such as Forbes have purported that it could be $4,000.

In an effort to kick-start the hospitality industry, which has been largely affected by the coronavirus pandemic because citizens across the country have been quarantining at home, citizens could use this tax credit in many different ways. WUSA reported that it could be used for vacation-related travel expenses in the United States such as hotels, restaurants, and theme parks through the year 2021. This credit could cover up to 50 percent of a household's travel expenses, up to $4,000. However, this is all dependent on whether another stimulus package is passed and whether this Vacation Tax Credit (or Explore Tax Credit) is included in it.

While it's uncertain whether this tax credit would actually be implemented in the future, it has already garnered the approval of many industry leaders. The U.S. Travel Association even released a statement about this possible credit, saying that they were grateful for the president's support on this front. Their statement, which came via Travel Association CEO Roger Dow, read, "An 'Explore America' tax credit and campaign will do wonders to put America back on the path to prosperity. We applaud the president's support, and with our industry's health and safety guidance for the reopening of travel businesses in place, we are very prepared to work with the administration to push the effort forward at the right time."