The IRS issued Notice 2021-52, an annual notice providing updated special per diem rate information for the federal fiscal year starting October 1, 2021. Because employees may not claim itemized deductions for unreimbursed business expenses, including travel expenses, per diem rate information applies only to self-employed taxpayers and to employers’ accountable plans and other travel guidelines.
Special per diem rates
Special per diem rates apply to the following:
- Transportation industry rates. The special meal and incidental expense (M&IE) rates for the transportation industry increase from $66 to $69 for the continental United States (CONUS) and from $71 to $74 outside the continental United States (OCONUS).
- Incidental expense rate. The rate for the incidental expense only deduction remains at $5 for CONUS and OCONUS.
- High-low substantiation method rates. The per diem rates increase from $292 to $296 for travel to high-cost localities and from $198 to $202 for travel to other localities. The meals and incidental expense (M&IE) portion of the high-low rates increases from $71 to $74 for high cost localities and from $60 to $64 for other localities. The notice includes a list of high-cost localities for purposes of this method.
Regular per diem rates
For regular per diem information see GSA’s per diem rates.
Incidental expenses
Rev. Proc. 2011-47 states that for tax purposes the term incidental expense has the same meaning as that used in the Federal Travel Regulations issued by the General Services Administration (GSA). These regulations provide that incidental expenses include only “fees and tips given to porters, baggage carriers, bellhops, hotel maids, stewards or stewardesses and others on ships.” Other types of miscellaneous expenses may be deductible but require substantiation of the actual expense.
Lodging expenses
There is no standard lodging allowance.
- Employers use the lodging rates to determine the maximum travel allowance that may be provided tax-free to employees under an accountable plan.
Self-employed taxpayers must use actual lodging expenses to calculate their lodging deduction.