IRS Updates Per Diem Rates for 2020-2021

The Internal Revenue Service (IRS) issued their special per diem rates. These rates are the deducted expenses they are allowed for lodging, meals and incidentals. The effective date for these rates is October 1, 2020.

The notice includes the amounts for ordinary and necessary business expenses incurred when travelling away from home.

• Special transportation industry meal and incidental expenses (M&IE) rates

• Rate for the incidental expenses only deduction

• Rates and list of high-cost localities for purposes of the high-low substantiation method

Local market costs influence mid-priced hotels/lodging per diem rates. These maximum amounts can be reimbursed during official travel by federal employees. An additional savings measure, GSA’s methodology for lodging per diem rates has five percent taken off the average daily rate in the location.

Where to Find IRS Per Diem Rates for 2020-2021 – Notice 2020-71

All the rates can be located in Notice 2020-71. This is where the transportation industry rate, incidental details and list of the high-cost localities for high-low substantiation can be found.

For instance, the meal and incidental expense rates for taxpayers in the transportation industry is now $66 in the United States and $71 outside of the United States. Incidental expenses only deduction is $5 per day.

Travel to any high-cost locality was $292 in 2019 and $198 within the continental U.S. Section 274(n) identifies $71 for travel to a high-cost locality and $60 to other U.S. localities. Per diem rates for incidental-expenses-only substantiation are $71 for a high-cost locale and $60 for travel to other locales in the United States.

These meal and incidental expenses are for those paid or incurred on or after October 1, 2020.