Do you need receipts for expenses under $75 for the IRS?
The "$75 receipt rule" is one of the most widely cited — and dangerously misunderstood — rules in US small business taxation.
Many business owners and freelancers believe they can deduct any business purchase under $75 without holding a receipt. This is completely false.
The statutory exception exists under Treasury Regulation § 1.274-5(c)(2)(iii), and its scope is strictly limited to certain travel, meal, and entertainment expenses. If you apply it to general business operations, an IRS audit will swiftly disallow your deductions.
What the $75 rule does NOT cover
The $75 threshold was enacted under IRC § 274 specifically to reduce the burden of keeping cab slips, parking stubs, and small diner bills while traveling out of town on business.
It does not apply to everyday business expenses:
- Office supplies & stationery: A $45 printer cartridge or desk lamp requires a receipt.
- Tools & equipment: A $60 drill bit or charging cable requires a receipt.
- Software subscriptions & domains: Must be supported by a digital invoice or receipt.
- Inventory & materials: Any cost of goods sold requires documentation.
- Advertising & marketing: Invoices are required regardless of amount.
If an IRS agent audits your Schedule C and finds $4,000 in miscellaneous supply deductions with no receipts, asserting that "each item was under $75" will result in immediate disallowance and potential negligence penalties.
If you don't need a receipt, what do you need?
Even when an expense legitimately qualifies under the $75 travel exception (for instance, a $55 business lunch with a prospective client), you still have to prove the deduction.
The regulation waives the receipt, but it requires a contemporaneous log recording:
- Amount: The cost of the meal or taxi fare.
- Time: The date of the expense.
- Place: The name and location of the restaurant or route.
- Business Purpose: The nature of the business discussion or client meeting.
- Business Relationship: The names and occupations of the attendees.
If you don't write down who you dined with and what was discussed at the time it happened, the IRS can throw out the deduction under strict IRC § 274(d) substantiation standards.
The Cohan Rule and why it won't save you
In 1930, the landmark court case Cohan v. Commissioner established that if a taxpayer clearly incurred an expense but lacked receipts, the court could estimate a reasonable deduction.
However, Congress was so frustrated by widespread abuse of this rule that it passed IRC § 274(d) specifically to override the Cohan Rule for travel, meals, gifts, and listed property.
Today, for travel and entertainment, the Cohan Rule is legally barred: if you do not have either a receipt or a strict contemporaneous log, the court cannot estimate your deduction — it must be disallowed in full.
Keeping digital copies of all receipts with Bilbx eliminates the guesswork, protects your deductions, and ensures you never have to scramble for justification under audit.
Sources
Common questions
Do I need a receipt for business expenses under $75?
Only if the expense is NOT travel, transportation, or entertainment. Under Treas. Reg. § 1.274-5, you do not need receipts for travel and meal expenses under $75 (except lodging). For general office supplies, software, tools, and inventory, you must have proof regardless of amount.
Does the $75 rule apply to hotel and lodging expenses?
No. Treasury regulations explicitly state that lodging requires documentary evidence (a detailed hotel bill or folio) regardless of how low the cost is.
If I don't need a receipt for a $50 business meal, what do I need?
You must still record the expenditure in a timely log: the exact cost, date, location, the business purpose of the discussion, and the business relationship of the people attending.
Can I just guess my expenses under $75 without any record?
No. The $75 rule is an exemption from holding the physical receipt; it is not a free tax allowance. You must still have an accounting record proving the expense actually occurred.
Every figure on this page is checked against the ATO's own guidance and linked in the sources above. Last checked . Thresholds change each financial year, so if you are reading this well after that date, confirm the current figures before you rely on them. Terms.
Keep reading
How long do you need to keep receipts for the IRS?
Three years — or up to seven for certain deductions. When the IRS clock starts, which business records to hold, and when digital copies are enough.
ReadDoes the IRS accept photos of receipts?
Yes, under Revenue Procedure 97-22. The four conditions digital receipts must meet, legibility standards, and when you can throw away the paper.
ReadCan you return an item without a receipt in the US?
What US federal and state laws actually say about store returns, what counts as proof of purchase, and your rights under the Magnuson-Moss Warranty Act.
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