The untaxed portion of a travel nursing package is the part most nurses understand least, and it is the part that depends on the nurse rather than on the agency. A stipend is a reimbursement for the cost of working away from home. If there is no home to be away from, there is nothing to reimburse, and the money is ordinary taxable wages however the offer letter describes it.
This page describes the rules in general terms. It is not tax advice, and the sums involved are large enough to justify a professional who has prepared returns for healthcare travellers before.
What a tax home is
The Internal Revenue Service defines a tax home as the regular place of business or post of duty, regardless of where the family home is, and says it includes the entire city or general area in which the work is located.
That definition assumes a regular place of business, which a nurse taking successive thirteen-week contracts does not have. For those nurses the question is settled by a three-factor test. The nurse:
- performs part of their business in the area of their main home and uses that home for lodging while doing business there;
- has living expenses at the main home that are duplicated because the work requires being away from it;
- has not abandoned the area where both the historical place of lodging and the claimed main home are located, has family members living at the main home, or often uses that home for lodging.
Meeting all three means the tax home is the home where the nurse regularly lives. Meeting two means it depends on the rest of the facts. Meeting none makes the nurse an itinerant worker whose tax home is wherever they happen to be working, and an itinerant worker cannot receive an untaxed stipend at all.
Nurses satisfy the first factor by working part of the year at home, the second by keeping genuine duplicated living costs there, and the third by returning regularly. Rent paid to a friend or relative to satisfy the second factor has to be at a fair market rate; a token payment invented for the purpose is exactly what an examiner looks for.
The fifty-mile rule does not exist
Agencies and nurses both repeat that an assignment must be at least 50 miles from home for stipends to be untaxed. There is no such rule in the tax code.
What the rules actually turn on is whether the duties require being away from the general area of the tax home for substantially longer than an ordinary day's work, and needing sleep or rest to meet the demands of the work while away. Some agencies apply a mileage figure as their own internal policy, which is their prerogative, but it is a company rule and not a legal threshold. A nurse who takes an assignment close enough to sleep at home is not travelling away from home, whatever the distance, and the stipend is taxable wages.
The one-year rule
Working away from a tax home is only deductible or reimbursable untaxed while the work there is temporary. Work is not temporary if the nurse realistically expects it to last more than a year, and the test is what was reasonably expected rather than what happened.
Two consequences follow. A nurse taking successive contracts in different places is in a different position from one extending repeatedly at the same hospital, and the second should watch the twelve-month mark. And if the expectation changes part-way through, the treatment changes from the point of the change rather than retroactively.
Stipends, receipts and the federal per diem rates
A per diem stipend exists so that nobody has to collect receipts. The General Services Administration publishes maximum per diem rates by locality for federal travellers, separately for lodging and for meals and incidental expenses, and those rates are the reference point agencies work from.
For the federal fiscal year running from 1 October 2025, the standard rate covering most of the continental United States is $110 a night for lodging and $68 a day for meals and incidentals, $178 a day in total, unchanged from the previous year. Around 300 higher-cost localities have their own, larger rates, with meals and incidentals running up to $92 a day.
Two things follow for a traveller. The lodging component of a package should look different in San Francisco than in rural Kansas, because the federal figure it is built from does. And a stipend materially below the published rate for the locality is a choice the agency has made, not a rule it is following.
A nurse who spends less than the stipend keeps the difference, untaxed, provided the underlying entitlement holds. Travel and transportation allowances work differently in one respect worth knowing: any portion not actually spent on travel and transportation has to be added back to income.
Deductions a travel nurse cannot take
Before 2018, unreimbursed employee expenses were deductible for those who itemised, which mattered a great deal to travellers. The 2017 tax law suspended that deduction from 2018 through 2025, alongside a much larger standard deduction. Whether and in what form it returns depends on later legislation, and it is worth asking a preparer rather than assuming either way.
Records still matter even when nothing is being deducted. The documentation that shows duplicated living expenses at the tax home is what supports the untaxed treatment of the stipends themselves, which is a far larger sum than any deduction was.
Working in more than one state
A travel year usually means filing more than one state return: a resident return where the tax home is, and non-resident returns for states worked in that levy income tax. Resident states normally give a credit for tax paid elsewhere, so the same income is not taxed twice, but the credit has to be claimed.
A few states levy no income tax at all, which changes the value of an assignment there by a real amount. State and local taxes are also part of why two identical packages in different states are not worth the same.
What to keep
A contract for each assignment, showing dates and location. Proof of duplicated living costs at the tax home, such as a lease, mortgage statement or rent receipts at market rate. A record of days spent at the tax home. Mileage and travel receipts. Every pay stub, showing the split between wages and stipends, and the year-end W-2.
Related
Sources
- Publication 463, Travel, Gift, and Car Expenses. Internal Revenue Service, for the tax home definition and the three-factor test. Accessed September 9, 2026.
- Topic 511, Business travel expenses. Internal Revenue Service, on temporary assignments and the one-year rule. Accessed September 9, 2026.
- Per diem rates. U.S. General Services Administration, lodging and meals and incidental expense rates by locality. Accessed September 9, 2026.
- GSA releases FY 2026 CONUS per diem rates for federal travelers. U.S. General Services Administration, 15 August 2025, for the standard rate and the number of non-standard areas. Accessed September 9, 2026.
- What travel nurses need to know about taxes. NurseRecruiter, 25 March 2019, on the 50-mile myth, satisfying the three factors, and the 2018 deduction changes. Accessed September 9, 2026.
- Internal Revenue Bulletin 2012-37. Internal Revenue Service, on wage recharacterisation. Accessed September 9, 2026.