Business travelers who incur expenses while traveling away from home have new per-diem rates to use in substantiating certain of those expenses. The new rates are in effect from Oct. 1, 2018, to Sept. 30, 2019.
The updated rates are effective for per-diem allowances paid to any employee on or after Oct. 1, 2018, for travel away from home on or after that date, and supersede the rates previously valid for the period Oct. 1, 2017, through Sept. 30, 2018. All rates for the new period represent an increase over the rates for the expiring period.
For purposes of the high-low substantiation method, the per-diem rates are $287 for travel to any high-cost locality and $195 for travel to any other locality within the continental United States (CONUS). The amount of these rates that is treated as paid for meals (for purposes of IRC Sec. 274(n)) is $71 for travel to a high-cost locality and $60 for travel to any other locality within CONUS.
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.
The special meals and incidental expenses rates for taxpayers in the transportation industry are $66 for any locality of travel within CONUS and $71 for any locality of travel outside CONUS.
Taxpayers can find the IRS notice concerning the new rates here (Notice 2018-77). The notice contains a list of the localities that are high-cost localities (localities that have a federal per-diem rate of $241 or more) for all or part of the calendar year.
For guidance on the 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, click here (Rev. Proc. 2011-47).