IRS Increases Per Diem Allowance Slightly

On Oct. 1, 2019, the per diem rates for taxpayers are $71 for travel to a high-cost locality and $60 for other US cities

These numbers are to be used for per-diem allowances paid to any employee on or after October 1, 2019, for travel away from home. The IRS allows the use of per diem rates to make reimbursements easier for employers and employees. Per diem rates are a fixed amount paid to employees to compensate for lodging, meals, and incidental expenses incurred when traveling on business rather than using actual expenses. Per diem payments are not considered part of the employee’s wages for tax purposes so long as the payments are equal to, or less than the federal per diem rate, and the employee provides an expense report. If the employee doesn't provide a complete expense report, the payments will be taxable to the employee. Similarly, any payments which are more than the per diem rate will also be taxable.

As of October 1, 2019, the special meals and incidental expenses (M&IE) per diem rates for taxpayers has changed. The meals & incidental expenses only per diem is $71 for travel to a high-cost locality and $60 for travel to any other locality within the continental United States. In the transportation industry its $66 for any locality of travel in the continental United States and $71 for any locality of travel outside the continental United States. The per diem rate for meals & incidental expenses (M&IE) includes all meals, room service, laundry, dry cleaning, and pressing of clothing, and fees and tips for persons who provide services, such as food servers and luggage handlers.

The list of high-cost localities includes:

  • San Francisco
  • Boston
  • New York City
  • District of Columbia
  • Mill Valley/San Rafael/Novato, California
  • Crested Butte/Gunnison, Colorado
  • Petoskey, Michigan
  • Big Sky/West Yellowstone/Gardiner, Montana
  • Carlsbad, New Mexico
  • Nashville, Tennessee
  • Midland/Odessa, Texas.

The following localities are no longer on the list:

  • Los Angeles, California
  • San Diego, California
  • Duluth, Minnesota
  • Moab, Utah
  • Virginia Beach, Virginia.

The following localities are seasonally on the list:

  • Napa, California
  • Santa Barbara, California
  • Denver, Colorado
  • Vail, Colorado
  • Key West, Florida
  • Jekyll Island/Brunswick, Georgia
  • New York City, New York
  • Portland, Oregon
  • Philadelphia, Pennsylvania
  • Pecos, Texas
  • Vancouver, Washington
  • Jackson/Pinedale, Wyoming.

You can find the entire high-cost localities list, together with other per diem information, in Notice 2019-55 (downloads as a PDF). To find the federal government per diem rates by locality name or zip code, head over to the General Services Administration (GSA) website.

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