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Per Diem for Travel Rates Issued by IRS for 2019-2020

Those who travel for business and incur expenses during their travels must now use new per diem for travel rates. Taxpayers must now use these newly released rates to substantiate certain expenses between October 1, 2019 and September 30, 2020.

The 2019-2020 Rate

The IRS has recently released the per diem rates for 2019 to 2020. These new rates include incidental expenses and transportation industry meal rates. They also include rates for an incidental expenses deduction. A list of higher cost localities is also included for use in the high-low method of substantiation.

The recently updated rates are effective for the per diem travel allowances paid to employees after October 1, 2019. It affects employees who will be traveling from their homes on or after that date. The new rate supersedes Notice 2018-77, specifying the applicable rates between October 1, 2019, and September 30, 2020.

Rules For the Federal Per-Diem Rate

Rev.Proc.2011-47 provides the rules for the use of the federal per diem rate. These rules refer to the use of this rate for the substantiation of amounts for necessary and ordinary expenses incurred. Those expenses may relate to meals, incidental costs, and lodging employees incur or pay for when traveling for business. Any taxpayer using the localities list and rates in Notice 2019-55 has to ensure compliance with the Rev.Proc.2011-47 rules.

The High-Low Method Of Substantiation

For the high-low method of substantiation, the per diem for travel rate is $297 or $200. The $297 applies to employee travel in high-cost localities on the list. The $200 applies to employee travel in other localities in the continental U.S. This rate is slightly higher when compared with last year’s rate.

The rate amount in respect of meals under the terms of Sec.274(n) will be either $71 or $60. The $71 rate will apply for employee travel to high-cost localities on the list. The $60 rate will apply to employee travel to other localities within the continental U.S. Both these amounts remain unchanged from 2018’s figures.

This year’s notice also contains a comprehensive list of high-cost localities. These are the localities incurring federal per diem rates of over $248 for some or all of that calendar year. This is $7 more than last year’s figure. 

Incidental Expenses

The rates for incidental expenses only include tips and fees given to baggage carriers, porters, ship staff, and hotel workers. This has been the case since 2012. The per diem rate for incidental expense deductions is unchanged for this year. It remains at $5 daily, regardless of the travel locality.

The Transportation Industry 

Taxpayers working within the transportation sector benefit from special incidental expenses and meal rates. These per diem for travel rates stand at $66 and $71, respectively. The $66 rate applies to travel to any locality within the continental U.S. The $71 rate applies to travel out of the continental U.S. Both of these rates remain unchanged since the $3 increase seen last year. 

For more information about this article, please contact our tax professionals at taxalerts@windes.com or toll free at 844.4WINDES (844.494.6337).

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