If you travel often for business, you know the importance of keeping track of all your business expenses. Little things add up—especially when it comes time to make deductions for your tax return. As the prices of goods and services fluctuate, the IRS often revises its rates.

As of October 1, 2017, the IRS just updated its per diem rates for business expenses, allowing a slightly greater per diem in certain areas. Here’s how it all breaks down.


Special Transportation Industry Update

The IRS has a special rate for per diems for people that work in the transportation industry. For tax purposes, that includes commercial airline pilots, long distance truck drivers, flight attendants, or other high-travel jobs that require one to spend regular nights away from their tax home.

For the transportation industry, special meals and incidental expenses are $63 within the continental US. For outside the continental U.S., the rate is $68.


Incidental Expenses Update

Incidental expenses most often refer to fees and tips you spend while traveling, such as a tip to baggage handler or another service employee. For this, the rate is $5 per day, both for inside and outside the United States.


The High Low Substantiation Method Update

The high-low substantiation method is an IRS accepted accounting technique whereby an accountant can determine the variable rates of cost for a product or service. There are special accepted per diem rates that are allocated for this method of accounting. They are as follows:

  • $284 for travel to high-cost locales, $191 for travel anywhere else within the U.S.
  • $68 for meals to high-cost locales, $57 for meals for anywhere else with the U.S. 


Special High Cost Localities

The IRS has provided a list of special high-cost localities within the United States. Depending on seasonal rates, and fluctuations in the economy, this list often changes. If you travel to a city that is defined as a high-cost locality, you get a special rate. In the recent update, the high cost locality per diem rate is $238.


Want to Know More About Business Expense Deductions?

The IRS has released detailed tables that are regularly updated to keep track of per diems for business expenses. PDM’s tax experts can help advise you on the best course of action. Contact us; with our years of technical experience, advanced training, and cutting edge technology, we are your financial partner.