Calculating Lodging Taxes for Business Travel Reimbursement
Working out what a company will cover for hotel taxes during a business trip can be complicated, particularly in high-demand periods when room rates climb. The reimbursement process differs depending on whether your nightly room cost falls above or below the area's permitted rate. A few straightforward calculations let you determine both the tax percentage and the portion you can claim.
By Hayden Hayes3 steps
Figure out your hotel taxes.
When you travel for work using company funds, understanding which expenses will be covered can be puzzling. Hotel taxes are sometimes reimbursed by employers while you are traveling, though this gets more complicated during peak season — the period when hotels increase their rates substantially in response to greater room demand. Still, you can work out the hotel tax using a few calculations.
Step 1
Gather your figures. You need at least three numbers: the room's total cost, the highest room rate the area permits, and the room's cost before taxes were added. Should you already know both the hotel tax rate and the tax amount charged per night, you can move past the next step.
Step 2
Determine the hotel tax rate. Take the room's post-tax cost and subtract the pre-tax cost. The result is the tax charged per night. Next, divide that nightly tax figure by the pre-tax room cost to obtain the tax rate as a decimal, then multiply by 100 to convert it to a percentage. Consider a stay costing $134.50 in total per night, where the room's pre-tax price is $115. The nightly tax comes to $19.50. Dividing 19.5 by 115 gives .1696. Multiplying by 100 yields a tax rate of 16.96 percent.
Step 3
Figure out the taxes you can claim for reimbursement. For company travel, your employer might cover the tax you pay each night at the hotel. When your room's price sits below the permitted rate, just take the nightly tax amount and multiply it by the number of nights to arrive at the total taxes paid. When your room's price exceeds the permitted rate, the process involves an extra step. First multiply the tax rate by the permitted rate, then divide by 100 to find the nightly taxes paid. Multiply that result by the number of nights you stayed to determine the total tax amount you may request as reimbursement. Using the earlier example, the permitted room rate is $105. Multiply $105 by 16.96 to get 1708.8. Dividing by 100 gives $17.09 — your reimbursable tax per night. Multiply by the number of nights to reach your total.
