If you travel for business, your per-diem rates are changing. The Internal Revenue Service (IRS) recently announced updated per-diem rates that will be used to substantiate ordinary and business expenses incurred during travel away from home. The new rates will be in effect from Oct. 1, 2021, to Sept. 30, 2022.
Employees who travel after Oct. 1 will be paid the adjusted per-diem rates, which specifically cover meals, lodging, and incidental expenses related to business travel.
The new per-diem rates represent a slight increase from last year at $202 for locations within the continental United States and $296 for high-cost locations. High-cost locations, listed in the new IRS guidance, are areas with a federal per-diem rate of $249 or more (up from $245 last year). This rate includes payment for meals and incidentals.
Meal and incidental-only rates have also slightly increased to $64 for locations within the U.S. and $74 to high-cost locations. The per-diem for incidental expenses will not change and will remain at $5 per day regardless of travel location. Incidentals include tips and fees for baggage carriers and staff in hotels and on ships.
Special rates that apply to the transportation industry have also been raised by $3 from last year to $69 within the United States and $74 for travel outside of the country.
When calculating expenses, taxpayers can use per-diem rates or actual expenses. However, anyone planning to use actual allowable expenses must keep detailed records and documentation to provide evidence of expenses for tax purposes.
If you have questions about business travel rates, please contact the accounting professionals at BSB. We can help you plan for your unique situation to maximize your tax benefits while remaining compliant with current tax law.