Does the IRS Require Receipts Under $75? Here’s What You Need to Know

When it comes to taxes and deductions, small business owners, freelancers, and self-employed individuals often walk a fine line between efficiency and compliance. One of the most frequently asked questions during tax preparation is:
“Do I need to save receipts for every expense, even the ones under $75?”

The short answer is: not always—but you probably should anyway.

While the IRS does provide some leeway when it comes to small-dollar purchases, relying solely on that exception can create problems down the road if you’re not careful. In this article, we will explore what the IRS actually states about receipts under $75, which expenses still require documentation, and why smart, digital record-keeping remains essential, regardless of the amount.

Understanding IRS Guidelines on Receipts

The IRS generally requires you to keep documentation for any deductible expense you report on your tax return. This helps demonstrate that the expense was ordinary and necessary for your business, and that it was not of a personal nature.

However, the IRS has carved out an exception for receipts under certain conditions.

The $75 Rule

According to IRS Publication 463 (Travel, Gift, and Car Expenses), you do not need to keep a receipt for a business expense under $75, except in certain situations. This $75 threshold applies to:

• Travel-related expenses (such as taxi fares, tolls, or transit passes)
  
• Meals while traveling for business (subject to substantiation rules)
  
• Out-of-pocket cash purchases for items or services tied to business needs
  

The IRS recognizes that it’s impractical to demand receipts for every minor charge a businessperson incurs on the road. This provision offers some relief from the paperwork burden—but it’s not a free pass to avoid tracking these expenses altogether.

What the IRS Still Requires—Even Under $75

Here’s where many filers get tripped up. While a physical receipt may not be mandatory, substantiation is. You still need to record the critical details that support your deduction:

• Amount – Even if the amount is under $75, it must be recorded precisely.
  
• Date – When the expense was incurred.
  
• Location – The place where a purchase or service is made.
  
• Business purpose – Why the expense was necessary and how it relates to your business.
  
• Recipient or relationship – If applicable, who was involved (e.g., a client lunch).
  

You can track these details in a logbook, spreadsheet, expense tracking software, or even handwritten notes—but digital systems make it far easier and more reliable, especially over time.

When Receipts Are Required—Regardless of Amount

Even if your expense falls under the $75 threshold, there are some categories where the receipt requirement still holds. These include:

1. Gifts to Clients or Employees

If you give a business-related gift—such as a $50 holiday basket to a top customer—you must retain the receipt to substantiate the expense. This holds true even if the gift costs under $75.

Additionally, keep in mind that the IRS limits the deductibility of business gifts to $25 per recipient per year, regardless of the total amount spent.

2. Entertainment Expenses

Most entertainment expenses, such as concert tickets or sporting events, are no longer deductible after the Tax Cuts and Jobs Act of 2017. However, in cases where expenses are partially deductible (such as meals associated with entertainment), proper documentation—including receipts—is still required.

3. Employee Reimbursements

If you’re reimbursing employees for business expenses under an accountable plan, the rules tighten. You must require your employees to submit receipts or other supporting documents to receive reimbursement, even if the expense is below $75. This protects both you and the employee from tax consequences.

4. Charitable Contributions

If you’re deducting a charitable donation for your business, the IRS may require a receipt or a written acknowledgment, especially if it’s over $250. However, even for small donations under $75, having a receipt or confirmation letter can strengthen your position if audited.

Real-World Examples of the $75 Rule in Action

Let’s examine how the rule applies to practical business expenses.

Example 1: A $52 Taxi Ride to the Airport

Is a receipt required?
Not strictly. As a travel-related expense under $75, a receipt isn’t mandatory.
What should you record?
Date, amount, destination, and business purpose (e.g., flight to a client meeting in Chicago).

Example 2: $40 Team Lunch at a Local Café

Is a receipt required?
No, but you must still document the purpose and attendees.
What should you record?
Names of attendees, business discussion points, and how the lunch relates to business.

Example 3: $60 Gift Card to a Customer

Is a receipt required?
Yes. Gifts fall outside the $75 exemption and must be fully documented.

Why Relying on the $75 Rule Alone Can Backfire

Although the IRS does not require receipts under $75 in some cases, relying on this rule as a long-term record-keeping strategy is risky. Here’s why:

1. Increased Audit Scrutiny

Small businesses and sole proprietors are more likely to face audits than larger corporations. If your return raises red flags—such as unusually high deductions without clear documentation—an IRS auditor may dig deeper. Missing records, even for small expenses, could lead to denied deductions or penalties.

2. Poor Visibility into Your Spending

Without consistent tracking, you lose visibility into how your money is being spent. You might forget recurring charges, underreport business expenses, or overlook potential deductions.

3. Harder Year-End Organization

If your expenses are scattered across various receipts, emails, credit card statements, and handwritten notes, year-end reconciliation can become a headache. Worse, you may find yourself scrambling for missing details when it’s time to file.

The Smart Way to Track All Expenses—Receipts or Not

The most efficient way to stay compliant and organized is to adopt a digital recordkeeping system. Even for under-$75 purchases, using technology to track, categorize, and store expense details pays off.

Features to Look For in a Digital System:

• Mobile receipt scanning – Instantly capture paper receipts with your phone
  
• Auto-extraction of data – Pulls key details like date, vendor, and total
  
• Custom categories – Sort expenses into business-specific buckets
  
• Cloud backup – Keeps your documents secure and accessible
  
• Searchable records – Find an old transaction in seconds
  
• Export capabilities – Generate reports for your tax preparer or accounting software
  

With tools like Neat, you can go from “where’s that receipt?” to “here’s everything you need” in seconds—streamlining tax prep, reducing stress, and staying audit-ready year-round.

Frequently Asked Questions

Can I take a deduction for cash purchases under $75 without a receipt?

Yes—but only if you have reliable documentation that includes the date, amount, purpose, and vendor. That said, cash expenses are more likely to raise eyebrows during an audit, so maintaining detailed records is critical.

Do digital receipts count?

Absolutely. Digital receipts and scans are entirely acceptable to the IRS as long as they are legible, complete, and accessible upon request. In fact, the IRS encourages electronic storage, provided the system is reliable and secure.

What about recurring under-$75 expenses, like monthly subscriptions?

You should still retain documentation, even if the monthly amount is small. These recurring charges often add up, and without records, you could miss out on deductions or invite questions from auditors.

Final Thoughts: Don’t Let the $75 Rule Be a Shortcut for Sloppy Recordkeeping

The IRS’s $75 rule is designed to offer flexibility—not to encourage poor financial documentation. While it’s helpful for minimizing paperwork, it doesn’t eliminate your obligation to justify your deductions with solid records.

In today’s digital age, there’s no reason not to adopt smarter, simpler methods for managing business expenses—especially when the stakes include your taxes, your time, and your peace of mind.

By implementing a digital document and expense management system like Neat, you can confidently keep track of every expense, big or small, and always be prepared—whether it’s for a last-minute tax filing or an unexpected audit.

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