IRS Issues Federal ‘High-Low’ Per Diem Rates Effective October 1

The IRS has released the optional “high-low” per diem rates for lodging expenses and meals and incidental expenses (M&IE) that may be used instead of the General Services Administration’s “actual” per diem rates for travel to locations within the continental U.S. (CONUS), the special federal M&IE per diem rates applicable to the transportation industry, and the per diem rate for incidental expenses. The updated high-low rates apply for travel undertaken on or after October 1, 2023 [Notice 2023-68, 9-25-23].

High-Low Rates

The “high” rate for lodging expenses and M&IE increases to $309 (from $297) for travel to any high-cost locality, while the “low” rate increases to $214 (from $204) for travel to any other locality within CONUS. The rates for M&IE remain at $74 for high-cost localities and $64 for any other locality within CONUS.

Changes to High-Cost Localities

Notice 2023-68 contains an updated list of high-cost localities, which now includes Yosemite National Park, Calif.; Tampa/St. Petersburg, Fla.; Atlanta, Ga.; Missoula, Mont.; Saratoga Springs/Schenectady, N.Y.; Eugene/Florence, Ore.; and Montpelier, Vt.

The portions of the year for which some localities are considered high-cost has also been adjusted, and four localities have been removed from the list.

Other Items

Transportation industry rates. The federal M&IE rates for the transportation industry remain at $69 for any locality of travel within CONUS and $74 for any locality of travel outside the continental U.S.

Incidental expenses. Instead of using actual expenses in computing the amount allowable as a deduction for ordinary and necessary incidental expenses paid or incurred for travel away from home, an employee or self-employed individual may use an amount computed at the rate of $5 (unchanged) per day for each calendar day (or partial day) he or she is away from home.

A full list of the high-cost localities, along with more information about the transportation industry rates and incidental expenses, will be in Payroll Currently (Issue 10, Vol. 31, 10-6-23).

To learn more about federal and state laws, regulations, and information to keep your company’s payroll operations in compliance, check out Payroll Source Plus!

Rayna Alexander, Esq., is Editor of Payroll Information Resources for PayrollOrg.