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Tax

IRS Increases Per Diem Rates

For lower-cost locations of business travel, the daily per diem rate will be $204. The high rate will be $297.

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The Internal Revenue Service has announced that per diem rates will increase starting Oct. 1, 2021. For lower-cost locations of business travel, the daily per diem rate will be $204. The high rate will be $297. The new rates will be effective from Oct. 1, 2022, through Sept. 30, 2023.

Per diem reimbursement can be offered to employees when they are traveling in lieu of tracking specific expenses for lodging, meals and ordinary incidental business expenses. The per diem allotments can then be claimed as expenses by the business on its taxes. Per diem rates can vary based on the locality of the travel within the United States, as some areas have higher costs. This high-low substantiation method allows for higher expensable rates.

Per diem rules further restrict what portion of the daily allowance is meant for meals. For low cost travel destinations, that amount is $64; for higher-cost locations, it is $74 per day. Those in the transportation industry have allowable rates for means and incidental expenses of $69 per day for U.S. locations, and $74 for locations abroad.

The list of which cities and regions qualify as high-cost or low-cost is revised periodically and is accessible at: https://www.irs.gov/pub/irs-drop/n-22-44.pdf