Updated Special Per Diem Rates Released

October 10, 2018

The IRS recently released Notice 2018-77, which details updated special per-diem rates, effective October 1, 2018 through September 30, 2019. These rates apply to the per-diem allowances paid by employers to their employees in order to cover “ordinary and necessary business expenses incurred while traveling away from home.” Notice 2018-77 covered the following:

 

  • Special Transportation Industry Meal and Incidental Expenses Rates – Notice 2018-77 raised each of the rates in this category by three dollars. The new per-diem rate for transportation industry taxpayers within the continental US is now $66 (up from $63); the rate for travel outside the continental US is now $71 (up from $68).
  • The Rate for the Incidental Expenses Only Deduction – These expenses are limited to tips given to hotel and ship staff, including baggage handlers. The per-diem rate remains at $5 per day.
  • The Rates and List of High-Cost Localities for Purposes of the High-Low Substantiation Method – Raised slightly from last year, the per-diem rate for travel to any high-cost locality is now $287 (with $71 allocated for meals), and the rate for travel to any other locality within the continental US is $195 (with $60 allocated for meals). See Notice 2018-77 for the list of high-cost localities.

For more details, check out this article from the Journal of Accountancy.