IRS Raises Per Diem Standard Rates for Business Travel
The IRS recently released Notice 2023-68, which raises the special per diem rates by which taxpayers may substantiate ordinary and necessary business expenses of travel starting Oct. 1.
Generally, a payer may consider substantiated for federal tax purposes an employee's expenses incurred for employment-related travel in an amount up to or equaling the federal per diem rate for the locality of travel in lieu of actual expenses incurred.
The annual update for the period of Oct. 1, 2023, to Sept. 30, 2024, includes the per diem rate under the high-low substantiation method for travel within the continental United States (CONUS). For non-high-cost localities, that rate will be $214, up from $204. The rate for high-cost localities within the CONUS will be $309, up from $297. The share of the rates treated as paid-for meals for purposes of Sec. 274(n) will be $74 for high-cost CONUS localities and $64 for all other CONUS localities, both the same as currently.
In addition, the notice amends the list of high-cost localities for the new annual period. Notably, Los Angeles, California, and Portland, Oregon, have been removed from the list of high-cost localities. High-cost localities have a federal per diem rate of $261 or more.
The notice also specifies the special rates for taxpayers in the transportation industry. The meals and incidental expenses rates will be unchanged from their current rates of $69 for any locality of travel within the CONUS and $74 for localities of travel outside the CONUS.
The incidental-expenses-only rate will remain at $5 per day for travel both in and outside the CONUS.