IRS releases latest per diem rates for business expenses

from our US office

The Internal Revenue Service (IRS) has released its annual update to the per diem rates for business travel expenses.

The revised rates come into effect on October 1st, 2017 and cover the special per diem allowances for lodging, meals and incidental expenses.

The details are announced in IRS Notice 2017-54 which includes specific rates for the transportation industry, incidental expense only deductions and a revised list of high-cost localities.

For taxpayers in the transportation industry, the meals and incidental expenses rate is $63 for travel within the continental United States, $68 anywhere outside. A rate of $5 per day has been set for any incidental expenses only deductions within or outside the continental U.S.

High-Low Revisions

For those businesses using the high-low substantiation method, the per diem rates are $284 for travel to high-cost locales and $191 for anywhere else within the continental U.S. The amount treated as being for meals is $68 for high-cost localities and $57 for elsewhere.

The IRS notice also includes a revised list of high-cost localities - those with a per diem rate of $238 or more. The new additions are:

Oakland (California), Lewes (Delaware), Fort Myers (Florida), Hyannis (Massachusetts), Petoskey (Michigan), Portland, (Oregon) and Vancouver (Washington)

Those being removed from the list are:

Sedona (Arizona), Los Angeles (California), Vero Beach (Florida), Kill Devil (North Carolina)

Using a digital expense management system such as webexpenses means that you can roll out these changes easily from within the system. Webexpenses provides a better way for businesses to manage and monitor employee expenses. You can request a demo here.