IRS Publication 463 states that you must generally have documentary evidence, such as receipts, canceled checks, or bills, to support travel, gift, and transportation expenses. But the publication gives an exception when the expense, other than lodging, is less than $75, or when you have a transportation expense for which a receipt is not readily available, or when certain per diem/accountable-plan rules apply for meals and lodging while traveling away from home. That is what people usually mean by the “$75 rule.”

 

The important nuance is that the rule is not permission to deduct undocumented expenses however you want. The same publication says you still need adequate records, you cannot deduct estimates or approximations, and you must be able to substantiate the amount, date, place, essential character, and business purpose of the expense. So, in plain English, the $75 rule is really a receipt exception, not a proof exception. If the IRS examines the return, you still need enough records to show the expense was real and business-related.