Would you like the government to pay half the cost of your next vacation? A coronavirus stimulus package called Explore America Tax Credit could give you up to $4,000 to go on vacation. You could spend the cash on hotels, airfares, restaurants, theme parks, and other touristy things. The four grand vacation money would cover up to 50% of your expenses for breaks taken in the U.S.
The only thing — don’t go booking flights and hotels just now if you want the vacation cash. The Explore America Tax Credit proposal is only an idea that’s yet to take off. But it could be a win-win solution for holidaymakers and the hard-hit tourism industry. You’d get something to look forward to after the miserable coronavirus lockdown. And, the cash would help more people who lost their job due to Covid-19 get back to work quickly.
We’ll look at what the Explore America Tax Credit could mean for your vacation plans. After all, who wouldn’t jump at the chance to get 4,000 bucks to spend on vacation?
Why a Tax Credit to Explore America is Vital
The impact of the Covid-19 pandemic was like a wrecking ball shattering the tourism industry. While many people were able to work from home, that wasn’t an option for service industry workers. Restaurants had to close, flights got grounded, and resorts became ghost towns.
Many analysts say that a slow recovery from Covid-19 could devastate the tourism economy. A study in June predicted that international tourism could see a decline of between 60 and 80%. In the U.S., this could result in job losses of up to 7 million people in the restaurant sector alone. The report outlined three things that are needed:
- Lifting travel restrictions
- Restoring traveler confidence
- To rethink the tourism sector to ensure future success
For many Americans, getting up to $4,000 to take a vacation could help restore confidence. This is true if you’re anxious about being cooped up in a cramped airplane or not sure how to enjoy yourself at Disneyland while social distancing.
Of course, the government has already pumped money into the tourism sector. In the CARES Act, airlines got $58 million of the $2 trillion stimulus package. There were also some indirect benefits. Tourism-related businesses could put staff on furlough. People who lost their jobs got an extra $600 on top of their regular unemployment benefits.
If you’re worried about the end of the extra unemployment benefits ending in July, find out how much money you could receive in the proposed HEROES Act. However, it’s only going to be in July or August when the Senate discusses this second stimulus bill.
But now the government wants to get us moving again. And a nice vacation might help to lift our coronavirus woes.
How the Explore America Tax Credit Would Work
The Explore America program is to give a much-needed boost to the U.S. tourism sector. If you take a vacation in-country, you could claim back up to 50 percent of your vacation expenses. This would cover accommodation, food, and travel. Each taxpayer could claim up to $4,000 in tax credits.
The goal of the tax credit to Explore America is two-fold:
- Boost employment
- Support local economies
How would the Explore America Tax Credit scheme work? Let’s look at what could be on the table when you’re making your vacation plans for 2020 or 2021.
Get $4,000 for going on vacation
To qualify for your $4,000 vacation bonus, you would have to plan a holiday in the U.S. and use U.S.-based businesses. The tax credit scheme would cover travel-related expenses such as:
- Flying on U.S. airlines
- Renting a car
- Entry passes to theme parks
- Hotel or other types of accommodation
- Meals in restaurants
- Additional costs related to taking a vacation
Each taxpayer would then be able to claim up to 50 percent of their vacation expenses in their tax return. Claims have a cap of $4,000. If the total cost of your family vacation were $8,000 or more, you would receive four grand in tax credits.
What We Don’t Know About the Explore America Tax Credit Scheme
There is still much that’s unclear about the vacation stimulus scheme. First, the ideas about stimulating the tourism economy using tax credits were only part of a roundtable discussion between president Trump and restaurant industry executives. No details have been worked out, and much is still up in the air.
Here are some details about the Explore America travel credits that we don’t know about:
- Income limits — Previous Covid-19 stimulus packages had income limits and didn’t include the highest earners. It’s also not clear if income levels would affect the amount of vacation tax credits to claim.
- Eligible expenses — There’s no information about the distance you would have to travel to claim travel credits. For example, would you need to go a minimum distance from home before being eligible? Would all the expenses have to be made on one vacation, or could they be spread out throughout the tax year? It’s all unclear at the moment.
- Retrospective payments — No one is sure if you could claim for vacation expenses incurred before any bill is passed. This is important, especially as many people are already making vacation plans for 2020.
Explore America vs. The TRIP Bill
The Explore America Tax Credit scheme isn’t the only Covid-19 stimulus package that Washington talks about. There’s a similar one called the TRIP Bill. In essence, the TRIP Bill is similar to the Explore America one. However, we know a bit more about its proposals. Here are some of what the TRIP Bill includes:
- Up to $4,000 in tax credits for each taxpayer and up to $500 for each child — So, a family of four could claim up to $9,000 in credits for their vacation expenses.
- You would have to travel at least 50 miles from home to qualify.
- Travel expenses include accommodation, entertainment, transportation, and recreation.
- You could claim for all travel expenses between 1 January 2020 and 31 December 2022.
Explore America Tax Credit: A Takeaway
Getting up to $4,000 to encourage you to take a vacation could be a great incentive to travel. You could enjoy an extraordinary break with your family and support the economic recovery at the same time.