Travel and taxes: what flight crews should know

A crew member's tax return has a few things most people's don't: per diem for every hour away from base, layovers in a dozen states and several countries, a commute that may cross the country, and a state of residence that may not be the state of the base. Each has its own rule, and the rules changed in 2025. What follows covers how each works for US crews, where the rule comes from, and what records to keep.

This is general information about US federal rules as of October 2026, not tax advice. Your situation depends on your contract, your state and your whole return. A tax professional who knows airline crews is worth the fee.

Per diem: when it's tax-free and when it's pay

Airline contracts usually pay crews per diem by the hour, for the time away from base. Whether that money is taxed depends on two things: whether the airline pays it under an accountable plan, and how it compares with the federal rate.

An accountable plan, in the words of IRS Publication 463, must meet three rules: your expenses have a business connection, you adequately account for them to your employer within a reasonable time, and you return any excess within a reasonable time. For a per diem, the accounting is the trip record itself: when, where and why you were away.

Then the comparison:

• Per diem at or below the federal rate. It isn't included in box 1 of your W-2, and you don't report it.
• Per diem above the federal rate. Your employer reports the part up to the federal rate in box 12 with code L (not taxable), and includes the excess in box 1 as wages. You pay tax on that part like any other pay.
• Not under an accountable plan. The whole amount is wages.

So the first thing to check, on your last W-2, is box 12. A code L there means your airline paid more per diem than the federal rate and taxed the difference.

The transportation industry's special meal rate

The federal rate for meals and incidental expenses (M&IE) normally depends on where you sleep. For people whose job is moving people or goods, the IRS offers a simpler alternative. Under section 4.04 of Revenue Procedure 2019-48, you're in the transportation industry if your work "directly involves moving people or goods by airplane, barge, bus, ship, train, or truck" and regularly involves traveling away from home and stopping, on a single trip, at places with different federal M&IE rates. Pilots and flight attendants on a typical pairing fit both parts.

The IRS sets the special rate each year in a notice. For October 1, 2026, to September 30, 2027, Notice 2026-60 keeps it unchanged:

Two details matter for crews:

• Your employer can compare by period, not by day. Section 4.04(4) lets an employer in the transportation industry check its per diem against the special rate monthly (or more often) rather than daily: the total per diem paid for the period against the special rate times the days or partial days you were away. An hourly per diem that runs over on a long international day and under on a short one can come out under the federal rate for the month.
• It's all or nothing for the year. An employer that uses the special rate for an employee must use it for all of that employee's travel in the area (CONUS or OCONUS) for the calendar year, and so must a self-employed person.

A quick sense of scale: $80 a day is $3.33 for each hour of a full day away. Whether your per diem is above or below that depends on your contract's hourly rate and on how your airline counts partial days, which is why the code L amount on the W-2 is the number to look at, not a back-of-the-envelope figure.

Can you deduct what per diem doesn't cover?

For most W-2 crew members, no. The Tax Cuts and Jobs Act suspended "miscellaneous itemized deductions subject to the 2% floor," which is where unreimbursed employee expenses (uniform upkeep, a crash pad, meals beyond per diem, a headset) used to go, for 2018 through 2025. The One Big Beautiful Bill Act, signed July 4, 2025, made that suspension permanent. It added an exception from 2026 for educators' unreimbursed expenses, but not for other employees.

Publication 463 lists the employees who can still deduct unreimbursed travel expenses: Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses. Airline crews aren't on the list.

Publication 463 also points out a catch. If your employer would reimburse an expense and you don't claim the reimbursement, you can't deduct the expense either.

If you're self-employed (a contract pilot paid on a 1099, for example), the picture is different. You deduct business travel on your own business return, you can use the special transportation rate under section 4.04 instead of tracking each meal, and meals while you're subject to the Department of Transportation's hours-of-service limits are 80% deductible rather than the usual 50%. Publication 463 names "certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators)" under FAA regulations among those covered.

The commute and your tax home

For tax purposes, travel expenses are the costs of traveling away from your tax home, and Publication 463 defines it plainly: "Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home." For airline crews, that is normally the crew base.

Two consequences follow. First, the commute from where you live to your base is commuting, not travel: "You can't deduct commuting expenses no matter how far your home is from your regular place of work," says Publication 463. A flight from Orlando to report in Boston is a commute, however early the alarm. Second, a crash pad near the base is generally a cost of living at your tax home, not of traveling away from it.

Trips away from your base, on the other hand, are travel. That's why per diem starts at report and why the days and nights away on a trip are the numbers that matter.

Which states can tax your pay

Crews fly through many states in a month. Without a special rule, each could claim a share of your pay. Congress settled this for airline crews in federal law, 49 U.S.C. 40116(f). For an employee of an air carrier with regularly assigned duties on aircraft in at least two states, pay is subject to the income tax laws of only:

1. the state (or city or other political subdivision) where you reside; and
2. the state (or subdivision) where you earn more than 50% of your pay from the carrier.

The law also says how to measure the second test: you earn more than 50% of your pay in a state when your scheduled flight time in that state is more than 50% of your total scheduled flight time for the calendar year. So unless more than half of your scheduled flight time for the year is in one other state, your airline pay is taxed only where you reside, which can be a state with no income tax on wages.

Three cautions:

• "Residence" is your state's call. States decide who is a resident with their own tests, often based on where your permanent home is and how many days you spend there. Moving your residence to a no-tax state means really living there, with the documents to show it (driver's license, voter registration, home, car). Keep them.
• It applies to air carriers. Massachusetts, for example, applies the federal limit only to employees of operators holding an air carrier certificate. Corporate and other crews not covered by it are taxed under its ordinary rules, and Massachusetts then apportions their pay by the days they work there, counting each day a crew member flies out of Massachusetts.
• Union leave is covered too. Pay for authorized leave to work for your airline's union is taxed by the same two states, measured by the flight time you would have flown.

Overtime and premium pay

The One Big Beautiful Bill Act added a deduction for "qualified overtime compensation" for 2025 through 2028, of up to $12,500 a year ($25,000 on a joint return), phasing out above $150,000 of modified adjusted gross income ($300,000 joint). It covers only the premium part of overtime that the Fair Labor Standards Act requires.

That's the catch for airline crews. The FLSA's overtime rule doesn't apply to employees of air carriers covered by Title II of the Railway Labor Act. In an April 2026 letter, the IRS Office of Chief Counsel said this exemption "generally exempts employees of air carriers, such as flight attendants," so they are "not being paid qualified overtime compensation for purposes of the deduction." Premium pay under your contract (draft pay, junior assignment, holiday pay) is therefore generally not qualified overtime. The Department of Labor decides coverage case by case.

Flying abroad

US citizens are taxed on their worldwide income wherever they live, and flying international trips doesn't change that. The foreign earned income exclusion requires a tax home in a foreign country, and a crew member based in the US has a US tax home. Even for pilots who do live and work abroad, the IRS counts only pay for services "in or over a foreign country," and international waters and the airspace over them aren't a foreign country, so time over the ocean doesn't qualify.

Crews based outside the US follow their own country's rules and its tax treaties. Since a 2017 change to Article 15 of the OECD Model Tax Convention, the model gives the right to tax pay for work aboard an aircraft in international traffic to the crew member's state of residence. Many older treaties give it to the state where the airline has its place of effective management. Which applies depends on the treaty between the two countries involved, as Ireland's Revenue notes in its guidance for flight crews.

Keeping records: the logbook as evidence

Publication 463 says to keep the records that support an item of income or a deduction for 3 years from the date you file the return (a return filed early counts as filed on the due date). For travel, the records have to prove the time, place and business purpose of each trip, even when you use a standard meal allowance.

A crew logbook already holds most of that: every leg with its date, times, airports and the trip it belonged to. What it usually lacks is the totals your tax preparer asks for. In LogAloft, Reports → Duty & rest has The year for taxes: for each calendar year (by the year a trip starts), the number of trips, the time away from report to release, the nights away from the layovers, the per diem (split into domestic and international) worked out from your rates, the pay if you've set a rate, and the trip expenses you've noted. The copy trips button copies every trip of that year, with its layovers, hours away, nights, per diem and expenses, ready to paste into a spreadsheet for your preparer. Set your per diem rates under How duty is counted · per diem and pay at the bottom of Duty & rest; the duty limits guide shows where.

Your pay stubs and your airline's per diem statement are the official figures; LogAloft's year is there to check them and to answer the questions they don't.

A short checklist

• Look at box 12 of your W-2 for code L, and at box 1 for per diem included as wages.
• Know your tax home (your base) and keep the commute out of any travel expense.
• Keep evidence of your state of residence, and know whether you ever pass 50% of scheduled flight time in one state.
• If you're on a 1099, track trips and use the special rate and the 80% meal rule correctly.
• Keep your logbook, trip summaries and receipts for at least 3 years after filing.
• Ask a tax professional before you act on any of this.

Sources

1. Publication 463 (2025), Travel, Gift, and Car Expenses, Internal Revenue Service
2. Notice 2026-60, 2026-2027 Special Per Diem Rates, Internal Revenue Service
3. Rev. Proc. 2019-48, Internal Revenue Bulletin 2019-51 (section 4.04, transportation industry)
4. IRS raises per diem rates for business travel effective Oct. 1, Journal of Accountancy, September 2026
5. One Big Beautiful Bill Implements Significant Tax Package, University of Illinois Tax School
6. 49 U.S. Code § 40116, State taxation, Legal Information Institute
7. Directive 08-2: Taxation of Non-Resident Flight Crew Members, Massachusetts Department of Revenue
8. IRS Office of Chief Counsel, information letter 2026-0006 on air carrier employees and the qualified overtime deduction, April 15, 2026
9. Reporting foreign income and filing a tax return when living abroad, IRS Tax Tip 2023-36
10. Foreign Earned Income Exclusion, Internal Revenue Service
11. U.S. citizens performing services in foreign and international airspace, Internal Revenue Service
12. Tax Treatment of Flight Crew Members, Tax and Duty Manual Part 05-05-29, Irish Revenue