The IRS has introduced new per diem rates for business travel beginning October 1, 2024. These rates simplify the process for employers by allowing them to provide per diem allowances without requiring employees to document the exact amounts spent. Amounts not exceeding the applicable limit are substantiated automatically and unspent amounts do not have to be taxed or returned. Employees do, however, still have to provide proof of the time, place, and purpose of their travel. The reimbursed amount will be the lower of the actual allowance paid or the applicable per diem rate.
This update replaces provides new rates under the high-low substantiation method, which includes special rates for transportation industry employers and a rate for incidental expenses deductions.
For travel within the continental U.S., the high-low per diem rates have increased. For high-cost areas, the rate for lodging, meals, and incidental expenses is now $319, while for other areas, it is $225. The meal and incidental expenses (M&IE) rate has risen to $86 for high-cost locations and $74 for other areas. Several cities have been added or removed from the high-cost locality list, with some locations now considered high-cost during different parts of the year.
Self-employed individuals may use other per diem rates for business expenses, but employees cannot deduct unreimbursed expenses due to the Tax Cuts and Jobs Act. The per diem rate for incidental expenses remains unchanged at $5 per day.
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