IRS Posts New Per Diem Tax Deduction Rates For Business Travel

Come Oct. 1, the per diem rates used to calculate tax deductions for business travel expenses will be $319 for travel to high-cost locations and $225 for travel to low-cost areas, the IRS said on Friday.

Each year the IRS announces special per diem rates taxpayers can use to substantiate the amount of expenses for lodging, meals, and incidental expenses when traveling away from home.

Notice 2024-68, which the IRS published on Sept. 20, provides the special transportation industry rate, the rate for the incidental expenses-only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method for the period of Oct. 1, 2024, to Sept. 30, 2025. 

The use of a per diem substantiation method is not mandatory. Taxpayers can substantiate the actual allowable expenses if they maintain adequate records or other sufficient evidence for proper substantiation, according to the IRS.

The special meal and incidental expenses rates for taxpayers in the transportation industry for 2024-25 are $80 for any location in the continental United States and $86 for any areas outside the continental U.S., up from $69 and $74, respectively, for 2023-24. The rate for any travel locale inside or outside the continental U.S. for the incidental expenses-only deduction is still $5 per day.

For purposes of the high-low substantiation method, the per diem rates are $319 for travel to any high-cost locality and $225 for travel to any other location within the continental U.S., up from $309 and $214, respectively. The amount of the $309 high rate and $214 low rate that is treated as paid for meals is $86 for travel to any high-cost location and $74 for travel to any other area within the continental U.S.

Under the meal and incidental expenses-only substantiation method, per diem rates are $86 for travel to any high-cost locality and $74 for travel to any other locality within the continental U.S., up from $74 and $64, respectively.

Notice 2024-68 also provides a list of high-cost locations that have a federal per diem rate of $272 or more.

Revenue Procedure 2019-48 provides the rules for using per diem rates, rather than actual expenses, to substantiate the amount of expenses for lodging, meals, and incidental expenses for travel away from home. Taxpayers who use per diem rates to substantiate the amount of travel expenses under Rev. Proc. 2019-48 may use the federal per diem rates published annually by the General Services Administration. Rev. Proc. 2019-48 allows certain taxpayers to use a special transportation industry rate or to use rates under a high-low substantiation method for certain high-cost localities. The IRS announces these rates and the rate for the incidental expenses-only deduction in an annual notice.