IRS Publication 463: A 2025 Guide for Australians with U.S. Tax Interests

For Australians doing business in the United States, understanding American tax rules isn’t just a bureaucratic headache—it’s vital for staying on the right side of the IRS and maximising legitimate deductions. One document you can’t afford to overlook is IRS Publication 463. Whether you’re an Aussie entrepreneur, a remote worker with U.S. clients, or an expat managing American investments, here’s your 2025 roadmap to navigating travel, gift, and car expense deductions under U.S. tax law.

What Is IRS Publication 463—and Why Should Australians Care?

IRS Publication 463 is the U.S. Internal Revenue Service’s definitive guide on what Americans (and foreigners with U.S. tax obligations) can claim for travel, gift, and car expenses. While this publication is written for a U.S. audience, it’s highly relevant for Australians with dual tax filings, U.S. business interests, or property stateside.

• Travel Expenses: Outlines what counts as deductible business travel, from airfares to meals and incidentals.

• Gift Expenses: Sets strict limits—usually US$25 per recipient per year—on deductible business gifts.

• Car Expenses: Covers business use of vehicles, including mileage rates and actual expense methods.

In 2025, the IRS has maintained its focus on substantiation—meaning, if you can’t prove it, you can’t claim it. This is especially important for Australians, who may need to reconcile U.S. deductions with local tax reporting rules.

2025 Updates: What’s Changed in IRS Publication 463?

Each year, the IRS tweaks the details in Publication 463 to reflect inflation, legislative changes, and evolving business practices. Here’s what’s new in 2025 that Australians should note:

• Standard Mileage Rate: For 2025, the IRS mileage deduction rate has been updated to 67 cents per mile for business use—up from 65.5 cents in 2024. This affects Aussies driving in the U.S. or using U.S.-registered vehicles for business trips.

• Per Diem Rates: The daily allowances for meals and incidental expenses on business travel have been adjusted for inflation. If you’re using the per diem method, check the latest rates for your destination city.

• Record-Keeping Requirements: The IRS has doubled down on digital records. Electronic logs, cloud-stored receipts, and app-based mileage trackers are all valid, provided they’re detailed and accessible.

While the dollar amounts may seem minor, failing to comply with new substantiation rules or using outdated rates can trigger penalties or denied deductions.

Practical Examples: How IRS Publication 463 Affects Australians

Let’s say you’re a Sydney-based consultant who spent two weeks in New York pitching to American clients. Here’s how IRS Publication 463 guides your claims:

• Flights and Accommodation: Fully deductible if the trip was primarily for business. Keep your itineraries and receipts.

• Meals: Only 50% of your business meal costs are deductible. This includes business lunches and dinners with clients or colleagues.

• Gifts: If you brought a bottle of Penfolds for your U.S. client, only the first US$25 is deductible per person per year.

• Car Hire or Rideshare: The actual cost, or the standard mileage rate, can be claimed for business-related travel within the U.S.

Remember: The ATO may have different rules for reporting these expenses in Australia. Double-check for any double-taxation treaty nuances or consult a cross-border tax specialist.

How to Stay Compliant: Tips for Aussies with U.S. Tax Exposure

• Keep Meticulous Records: The IRS expects contemporaneous documentation—log expenses in real-time, not months after the fact.

• Use Digital Tools: Apps like Expensify or QuickBooks streamline record-keeping and can export data in IRS-friendly formats.

• Understand Dual Reporting: Some expenses may be deductible in the U.S. but not in Australia, or vice versa. Maintain separate records for each jurisdiction.

• Monitor Policy Changes: 2025 has seen a renewed IRS focus on cross-border compliance, especially for digital nomads and remote workers. Stay alert for mid-year updates.

Conclusion: Get Ahead of Your U.S. Tax Obligations

IRS Publication 463 isn’t just a dry government document—it’s a playbook for maximising legitimate deductions and avoiding trouble with the IRS. For Australians with U.S. ties, staying on top of these rules in 2025 means better compliance, fewer headaches, and potentially significant tax savings.