Business travelers inevitably incur a variety of expenses when traveling away from home, including hotels, meals, or incidental expenses. The Internal Revenue Service (IRS) annually updates its special per diem rates that taxpayers use to substantiate these ordinary and necessary business expenses. Notice 2017-54 will take effect October 1, 2017 and outlines the special transportation industry meal and incidental expense rates, the rates for incidental expenses only deduction, and the rates of high-cost localities for the purpose of the high- low substantiation method.
For taxpayers in the transportation industry, the special meals and incidental expenses rates are $63 for any locality within the continental United States (CONUS) and $68 for any locality outside of the continental United States (OCONUS). These special rate remain unchanged from last year. Incidental expenses include tips given to baggage carriers, hotel staff, potters, and staff on ships. The rate for the incidental expenses only deduction remains at $5 per day for any locality within or outside the continental United States. Furthermore, the high- low substantiation method was implemented by the IRS and may be used in lieu of special per diem rates.
The per diem rates for travel to any high- cost locality are $284 and $191 for travel to any other locality within the continental United States, or a low- cost locality. The portion of the $284 high rate and the $191 low rate that is treated as paid for meals is $68 and $57, respectively. In addition, Notice 2017-54 provides an updated list of high- cost localities for the calendar year which have a federal per diem rate of $238 or higher.
Should you have any questions about this or other tax updates, please do not hesitate to reach out to your team of trusted advisors.
Meet the Author
Jordan joined YHB in 2017 as an associate based in the Firm’s Winchester office. Jordan serves a variety of clients throughout Northern Virginia and the Eastern Panhandle of West Virginia. She is active with the Top of Virginia Regional Chamber Young Professionals Group and a regular volunteer with the United Way of the Northern Shenandoah Valley.