One important per diem rate used by truck drivers will remain unchanged when the new U.S. fiscal year begins on October 1, while another set of rates will increase.
The Internal Revenue Service said last week that its transportation-specific rate for meals and incidental expenses will remain at $80 per day for travel within the continental United States and $86 per day for travel outside the continental U.S. The allowance applies specifically to workers in the transportation industry.
Minnesota-based carrier TBros describes transportation per diem as the daily allowance permitted by the IRS for truck drivers to deduct meals and incidental expenses incurred while they are away from home. According to the carrier, the system can simplify record-keeping and may reduce taxable income more effectively than keeping track of every individual receipt.
A different adjustment applies to companies using the High-Low Substantiation Method. Under that system, the daily rate for travel to designated high-cost areas will increase from $319 to $329, while the rate for all other areas will rise from $225 to $230.
Unlike the transportation-specific allowance, these rates apply to companies across all industries, not only transportation businesses. The High-Low Substantiation Method is an alternative to the locality-based per diem substantiation method, which relies on different rates depending on the specific location.
By dividing locations into two broad categories high-cost and other areas the High-Low approach is generally intended to simplify the reporting and payment process.
Tax policy firm Thomas, Zollars & Lynch has described the system as an alternative to federal rates determined on a locality-by-locality basis. Under the method, a payer can use one rate for designated high-cost locations within the continental United States, known as CONUS, and another rate for all other CONUS locations.
The IRS high-cost designation also extends beyond major metropolitan areas such as New York and Los Angeles. In addition, a location does not necessarily retain its high-cost status throughout the entire year.
For example, Gulf Shores, Alabama, is designated as a high-cost locality from June 1 through July 31. Aspen, Colorado, carries the designation for virtually the entire year, with October and November excluded. New York City remains designated as high-cost for all 12 months.
Meanwhile, Panama City, Florida, which had previously appeared on the high-cost list, has been removed entirely from the latest IRS release.
