Special Per Diem Rates

Cross References

• Notice 2022-44

Each year the IRS updates the special per diem rates for taxpayers to use in substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home. These special per diem rates apply to the following.

• The special transportation industry meal and incidental expenses (M&IE) rates,
• The rate for the incidental expenses only deduction, and
• The rates and list of high-cost localities for purposes of the high-low substantiation

method.

50% limitation for meals. In general, IRC section 274(n)(1) limits a deduction for business meals to 50% of the cost. When the per diem rate is used to substantiate the cost of a meal, the taxpayer is allowed to deduct 50% of such per diem rate as the deduction for the business meal.

The Consolidated Appropriations Act, 2021, added IRC section 274(n)(2)(D) to the Internal Revenue Code which provides a temporary exception to the 50% limitation for business meals that are provided by a restaurant. Effective for expenses paid or incurred after December 31, 2020, and before January 1, 2023, food or beverages provided by a restaurant are 100% deductible provided the meal is otherwise deductible as a business meal. IRS Notice 2021-63 states that this 100% deductible amount for restaurant meals also applies when using the per diem rate to substantiate the cost of a meal.

Special M&IE rates for transportation industry. For workers subject to the U.S. Department of Transportation “hours of service” rules, a deduction of 80% for meals is allowed (compared to the general 50% limitation, unless the temporary 100% rate for restaurant meals applies). The “hours of service” rule in general limits the number of hours per day a worker can work. This can include individuals working on an airline, barge, bus, ship, train, or truck. In addition to a higher limit for deducting meals, transportation workers also have their own special standard meal and incidental expense (M&IE) rates.

Effective 10/1/2021 10/1/2022 M&IE, continental U.S. (CONUS) $69 $69

M&IE, outside continental U.S. (OCONUS) $74 $74

Rate for incidental expenses only deduction. Rev. Proc. 2011-47 revised the definition of incidental expenses to include only fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. These costs may be separately deducted or reimbursed from other travel costs. Effective October 1, 2022, the rate for the incidental expenses only deduction is $5 per day.

High-low substantiation method. The high-low substantiation method can be used by employers to pay employees a per diem travel allowance (hotels, meals, and incidentals) instead of using various rates that apply at different locations. By using this special per diem rate method, only two rates apply in the Continental United States (CONUS). The special high-low method is used only by employers to reimburse employees for their travel expenses. It cannot be used by employees or self-employed taxpayers to determine their unreimbursed business expense deductions. Employer reimbursements within these limits are considered substantiated.

High-cost localities. The following localities have a federal per diem rate of $250 or more, and are high-cost localities for the specified portion of the calendar year. All others are low-cost localities.

Alabama Gulf Shores Baldwin June 1 – July 31 Arizona Phoenix/Scottsdale Maricopa February 1 – March 31 Sedona City limits of Sedona October 1 – September 30 California Los Angeles Los Angeles, Orange, and Ventura, October 1 – October 31 and

Mill Valley/San Rafael/ Marin October 1 – October 31 and Novato June 1 – September 30 Monterey Monterey June 1 – August 31 Napa Napa October 1 – September 30 Oakland Alameda October 1 – September 30 San Diego San Diego February 1 – August 31 San Francisco San Francisco October 1 – September 30 San Luis Obispo San Luis Obispo June 1 – August 31 San Mateo/Foster City/ San Mateo October 1 – September 30 Belmont Santa Barbara Santa Barbara October 1 – September 30 Santa Monica City limits of Santa Monica October 1 – September 30 Sunnyvale/Palo Alto/San Santa Clara October 1 – September 30 Jose

Colorado Aspen Pitkin October 1 – March 31 and

Denver/Aurora Denver, Adams, Arapahoe, and October 1 – October 31 and

Durango La Plata June 1 – September 30 Grand Lake Grand December 1 – March 31 Silverthorne/Breckenridge Summit October 1 – March 31 and

Steamboat Springs Routt December 1 – March 31 Telluride San Miguel October 1 – September 30 Vail Eagle October 1 – September 30 Delaware Lewes Sussex July 1 – August 31 District of Columbia Washington D.C. (also the cities of Alexandria, Falls Church, and October 1 – September 30 Fairfax, and the counties of Arlington and Fairfax, in Virginia; and the counties of Montgomery and Prince George’s in Maryland) (See also Maryland and Virginia) Florida Boca Raton/Delray Beach/ Palm Beach and Hendry December 1 – April 30 Jupiter Bradenton Manatee February 1 – March 31 Cocoa Beach Brevard February 1 – March 31 Fort Lauderdale Broward October 1 – April 30 Fort Myers Lee February 1 – March 31 Fort Walton Beach/DeFuniak Okaloosa and Walton October 1 – October 31 Springs March 1 – September 30 Gulf Breeze Santa Rosa June 1 – July 31 Key West Monroe October 1 – September 30 Miami Miami-Dade December 1 – March 31 Naples Collier December 1 – April 30 Panama City Bay June 1 – July 31 Pensacola Escambia June 1 – July 31 Punta Gorda Charlotte February 1 – March 31 Sarasota Sarasota February 1 – April 30 Sebring Highlands February 1 – March 31 Stuart Martin February 1 – March 31 Vero Beach Indian River December 1 – April 30

Georgia Jekyll Island/Brunswick Glynn March 1 – July 31 Idaho Sun Valley/Ketchum Blaine and Elmore December 1 – March 31 and

Illinois Chicago Cook and Lake October 1 – November 30

Maine Bar Harbor/Rockport Hancock and Knox October 1 – October 31 and

Kennebunk/Kittery/Sanford York July 1 – August 31 Portland Cumberland and Sagadahoc July 1 – August 31 Maryland Ocean City Worcester July 1 – August 31 Washington, DC Montgomery and Prince George’s October 1 – September 30 Metropolitan Area Massachusetts Boston/Cambridge Suffolk and City of Cambridge October 1 – September 30 Falmouth City limits of Falmouth May 1 – August 31 Hyannis Barnstable less the city of Falmouth July 1 – August 31 Martha’s Vineyard Dukes October 1 – September 30 Nantucket Nantucket October 1 – September 30 Michigan Mackinac Island Mackinac July 1 – August 31 Petoskey Emmet July 1 – August 31 Traverse City Grand Traverse July 1 – August 31 Minnesota Duluth St. Louis October 1 – October 31 and

Montana Big Sky/West Yellowstone/ Gallatin and Park June 1 – September 30 Gardiner Kalispell/Whitefish Flathead July 1 – August 31 New Mexico Carlsbad Eddy October 1 – September 30 New Jersey Toms River Ocean July 1 – August 31

New York Glens Falls Warren July 1 – August 31 Lake Placid Essex July 1 – August 31 New York City Bronx, Kings, New York, Queens, October 1 – December 31

North Carolina Kill Devil Hills Dare April 1 – September 30 Oregon Lincoln City Lincoln July 1 – August 31 Portland Multnomah October 1 – October 31 and

Seaside Clatsop July 1 – August 31 Pennsylvania Hershey Hershey June 1 – August 31 Philadelphia Philadelphia October 1 – November 30,

Rhode Island Jamestown/Middletown/ Newport October 1 – October 31 and Newport June 1 – September 30 South Carolina Charleston Charleston, Berkeley, and October 1 – September 30

Hilton Head Beaufort June 1 – August 31 Myrtle Beach Horry June 1 – August 31 Tennessee Nashville Davidson October 1 – September 30 Utah Moab Grand October 1 – October 31 and

Park City Summit October 1 – September 30 Virginia Virginia Beach City of Virginia Beach June 1 – August 31 Wallops Island Accomack July 1 – August 31 Washington, DC Metro Cities of Alexandria, Falls Church, October 1 – September 30 Area and Fairfax; Counties of Arlington

Vermont Manchester Bennington October 1 – September 30

Washington Port Angeles/Port Townsend Clallam and Jefferson July 1 – August 31 Seattle King October 1 – September 30 Vancouver Clark, Cowlitz, and Skamania October 1 – October 31 and

Wyoming Cody Park June 1 – September 30 Jackson/Pinedale Teton and Sublette October 1 – September 30