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T&E update: The latest on IRS per diem rates, high-cost localities

Brian Bingaman
by Brian Bingaman

Pass it along to A/P: There are new IRS per diem rates for business travelers, effective Oct. 1, 2023 through Sept. 30, 2024.

Notice 2023-68 announced the special IRS per diem rates, which you can use to substantiate the amount of expenses for lodging and meals and incidental expenses (M&IE) for your road warriors.

While not mandatory, many employers prefer a per diem payment approach to T&E instead of tallying up and reimbursing actual expenses based on employee-submitted records and receipts, and keeping records of all those allowable expenses.

Important IRS per diem numbers

Inflation strikes again. For the purposes of the high-low substantiation method, the new IRS per diem rates are:

  • $309 when traveling to any high-cost locality (currently $297), and
  • $214 for travel to any other locality within the continental U.S. (CONUS) (a $10 increase over the current rate).

However, M&IE per diems will hold steady for the next year:

  • $74 for high-cost localities, and
  • $64 for any other locality within CONUS.

Also staying the same are the special per diem rates for companies in the transportation industry: $69 for any area within CONUS and $74 for areas outside of CONUS.

The IRS per diem rate for incidental-expenses-only deductions remains $5 for all areas.

There’s also the option to use the federal per diem rates published annually by the U.S. General Services Administration, which we reported earlier. IRS Rev. Proc. 2019-48 provides the complete rules for using per diem rates.

High-cost localities: Who’s in, who’s out?

As of Oct. 1, the following areas have been added to the list of high-cost localities:

  • Yosemite National Park, CA
  • Tampa/St. Petersburg, FL
  • Atlanta
  • Missoula, MT
  • Saratoga Springs/Schenectady, NY
  • Eugene/Florence, OR, and
  • Montpelier, VT.

Here are the part-time high-cost locality changes to note:

  • San Diego (year-round)
  • Washington D.C., including the cities of Alexandria, Falls Church and Fairfax, and Arlington and Fairfax counties in Virginia; and Montgomery and Prince George’s counties in Maryland (Oct. 31-June 30 and Sept. 1-30)
  • Fort Lauderdale, FL (Jan. 1-April 30)
  • Fort Myers, FL (Dec. 1-March 31)
  • Fort Walton Beach/DeFuniak Springs, FL (June 1-July 31)
  • Miami, FL (Dec. 1-May 31)
  • Vero Beach, FL (year-round)
  • Portland, ME (Oct. 1-31 and July 1-Sept. 30)
  • Hilton Head, SC (March 1-Aug. 31)
  • Manchester, VT (Oct. 1-31 and Aug. 1-Sept. 30), and
  • Seattle (Oct. 1-31 and May 1-Sept. 30).

As of Oct. 1, the following cities drop off the list and become regular CONUS localities:

  • Los Angeles
  • Durango, CO
  • Portland, OR, and
  • Vancouver, WA.
Brian Bingaman
Brian Bingaman
Brian researches and writes about accounts payable and CFO management trends. He was a newspaper journalist in suburban Philadelphia for nearly 20 years.