Getty What is included in the vacation tax credit?
In May, the Trump administration stated they are considering an “Explore America” tax credit that would incentivize tourism in the United States in light of the economic distress caused by the coronavirus pandemic. What exactly is this vacation credit and what does it entail?
The “Explore America” tax credit would allot up to $4,000 per household in vacation expenses spent in the U.S. at hotels, theme parks, restaurants, and other tourism-related businesses through the end of 2021, according to Forbes. The credit could cover up to 50% of a household’s total vacation expenses and would be capped at $4,000 per household.
The intent of this tax credit would be to alleviate economic distress within the U.S. tourism industry, which has been hit hard by the coronavirus pandemic.
The U.S. Tourism Industry Has Been Hit Hard by COVID-19
According to AS.com, the tourism industry has been hit particularly hard by the pandemic– in fact, it accounted for almost 40% of the 20.7 million jobs lost in the U.S. in April.
In a roundtable discussion on May 18, President Trump first proposed the idea of a tax deduction for Americans to incentivize travel and, thereby, stimulate the economy.
Unsurprisingly, restaurants and travel industries that have been burdened by the coronavirus pandemic have welcomed this package with open arms. The Independent Restaurant Coalition said in a statement, “We are grateful that President Trump and Congress are taking the concerns of our industry seriously and look forward to working together to ensure our businesses can survive this crisis and our employees can get back to work.”
The U.S. Travel Association added, “An ‘Explore America’ tax credit and the campaign will do wonders to put America back on the path to prosperity. We applaud the president’s support.”
In a statement in May, the U.S. Travel Association stated that a vacation tax credit would allow people to expense over $50 on “meals, lodging, recreation, transportation, amusement, or entertainment.”
Will the ‘Explore America Tax Credit’ Be Enacted?
At this point, it is unclear if the Explore America Tax Credit has been proposed to the U.S. House of Representatives of the Senate just yet.
In the words of Forbes, “It’s difficult to tell if this idea is picking up any traction.” That’s because little has been mentioned in regards to the package since Trump mentioned the credit during May’s roundtable discussion.
The last time Trump addressed the idea of tax incentives came on June 5 at a press conference. Trump stated that the White House would be announcing tax incentives for both restaurants and parts of the entertainment industry “soon.”
“We’re looking at doing something in terms of an incentive with taxes, it could be deductions, it could be something else,” Trump said, according to Fox Business. “We’ll be announcing it pretty soon.”
Trump added that the initiative would be spearheaded by Treasury Secretary Steven Mnuchin.
White House economic adviser Larry Kudlow tells Fox Business that negotiations around another coronavirus stimulus relief package, which may include the Explore America credit, will likely not begin until after July 4.
This post will be updated with more information as it becomes available.
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