One key per diem rate used by truckers will be unchanged in the fiscal year that begins October 1 while another will increase.
The Internal Revenue Service last week said its transportation-specific meals and incidental expense rate will remain at $80 per day for travel within the continental U.S. and $86 for travel outside of it. That per diem rate is specific to workers in the transportation industry.
TBros, a carrier based in Minnesota, describes the transportation per diem as “the daily allowance the IRS lets truck drivers deduct for meals and incidental costs while they’re away from home. It simplifies record-keeping and often lowers taxable income more than tracking every receipt.”
But for companies that employ what is known as the High-Low Substantiation Method, the rates will rise to $329 from $319 if the travel is to areas designated as high cost areas, and to $230 from $225 for other areas.
That rate is applicable for all companies, not just those in transportation. It is an alternative to what is known as the per diem substantiation method, which is dependent on locality. Slicing all those localities into high-cost and low-cost areas into two buckets under the high-low system is seen as making the reporting and payment process easier.
The High-Low Substantiation Method has been described by the firm of Thomas, Zollars & Lynch in their website that tracks federal tax policy as “an alternative to the locality-by-locality federal rates…this method allows a payor to use one rate for designated high-cost localities within the continental U.S. (CONUS) and another for all other CONUS localities.”
The list of high-cost localities is not just big cities like New York and Los Angeles. It also isn’t a designation that necessarily lasts 365 days a year.
For example, Gulf Shores, Alabama gets that designation between June 1 and July 31. Aspen, Colorado gets it virtually all year except October and November. New York City is all 12 months. And Panama City, Florida, which had been on the list previously, is not there at all anymore in the latest release from the IRS.
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