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IRS updates business travel per-diem rates

By Paul Bonner

Please note: This item is from our archives and was published in 2021. It is provided for historical reference. The content may be out of date and links may no longer function.

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The IRS issued its annual update Friday of special per-diem rates for substantiating ordinary and necessary business expenses incurred while traveling away from home (Notice 2021-52).

The new rates are in effect from Oct. 1, 2021, to Sept. 30, 2022. Specifically, they are the special per-diem rates, including the transportation industry meal and incidental expenses rates; the rate for the incidental-expenses-only deduction; and the rates and list of high-cost localities for purposes of the high-low substantiation method.

The updated rates are effective for per-diem allowances paid to any employee on or after Oct. 1, 2021, for travel away from home on or after that date, and supersede the rates in Notice 2020-71, which provided the rates for Oct. 1, 2020, through Sept. 30, 2021.

Rev. Proc. 2019-48 provided general rules for using a federal per-diem rate to substantiate the amount of ordinary and necessary expenses for lodging, meals, and incidental costs paid or incurred for business-related travel away from home.

High-low substantiation method

For purposes of the high-low substantiation method, the per-diem rates are $296 for travel to any high-cost locality and $202 for travel to any other locality within the continental United States (CONUS), both slightly higher than last year.

The amount of these rates that is treated as paid for meals for purposes of Sec. 274(n) is $74 for travel to a high-cost locality and $64 for travel to any other locality within CONUS, both also slightly higher than last year.

The notice contains a list of the localities that are high-cost localities (localities that have a federal per-diem rate of $249 or more, $4 higher than last year) for all or part of the calendar year.

Incidental expenses

Since 2012, incidental expenses have included only fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. The per-diem rate for the incidental-expenses-only deduction remains unchanged at $5 per day for any locality of travel.

Transportation industry

The special meals and incidental expenses rates for taxpayers in the transportation industry are $69 for any locality of travel within CONUS and $74 for any locality of travel outside CONUS, both $3 more than last year.

— Paul Bonner (Paul.Bonner@aicpa-cima.com) is a Tax Adviser senior editor.