The special per diem rates by which taxpayers may substantiate ordinary and necessary business expenses of travel away from home will be slightly higher starting Oct. 1, the IRS provided Monday in Notice 2022-44.
Generally, in lieu of actual lodging, meal, and incidental expenses incurred, a payer may consider substantiated for federal tax purposes an employee’s expenses incurred for employment-related travel in an amount up to or equaling the federal per diem rate for the locality of travel. The high-low substantiation method applies a higher rate to designated high-cost localities and a lower rate to all other localities.
The annual update includes the per diem rate under the high-low substantiation method for travel within the continental United States (CONUS), which for non-high-cost localities will be $204. The rate for travel to high-cost localities within CONUS, which are listed in the notice, is $297. Those current rates for the period Oct. 1, 2021, to Sept. 30, 2022, are, respectively, $202 and $296. The portion of the rates treated as paid for meals for purposes of Sec. 274(n) is $74 for high-cost CONUS localities and $64 for all other CONUS localities, both the same as currently.
The notice also revises the list of high-cost localities for the upcoming new annual period (Oct. 1, 2022, to Sept. 30, 2023) for which the new rates are in effect. High-cost localities have a federal per-diem rate of $250 or more.
Notice 2022-44 also provides special rates for taxpayers in the transportation industry. The meals and incidental expenses rates are $69 for any locality of travel within CONUS and $74 for localities of travel outside CONUS, both the same as currently.
The incidental-expenses-only rate remains $5 per day as currently, for travel both in and outside CONUS.