IRS Announced the 2017-2018 Per Diem Rates for Lodging, Meals, and Incidental Expenses
What Employers and Employees Need to Know
David Gibbs, CPA, MBA
Focused on You. Dedicated to Your Success.
October 16, 2017

On October 16, 2017, the IRS announced the per diem (Latin for "per day") expense rates for 2017-2018 . The notice includes the special transportation industry rate, the rate for the incidental expenses only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method. 

Per diem rates are the fixed amount paid to compensate employees for lodging, meals, and incidental expenses incurred when traveling on business. These rates are used instead of the actual amount paid to reimburse employees for out-of-pockets expenses. Certain unreimbursed expenses may qualify for a deduction on a taxpayer’s federal return.

The special meals and incidental expenses (M&IE) rates for taxpayers in the transportation industry are $63 for travel within the continental U.S. and $68 for anywhere outside the continental U.S. These are the same as last year’s rates. M&IE includes all meals, room service, laundry, dry cleaning, and pressing of clothing, and fees and tips for persons who provide services, such as food servers and luggage handlers.

The rate for the incidental expenses only deduction is $5 per day for any locality within or outside the continental U.S. Incidental expenses include fees and tips paid at lodging, including porters and hotel staff.

For the high-low substantiation method, the per diem rates are $284 for travel to any high-cost locality and $191 for travel to anywhere else within the continental U.S. The M&IE only per diem is $68 (high-cost locality) and $57 for travel to any other locality within the continental U.S. 

The notice also provides a list of high-cost localities , which have a federal per diem rate of $238 for all or a portion of the calendar year.

Feel free to call us at 610-828-1900 or contact either David Gibbs, CPA, MBA, partner at David.Gibbs@MCC-CPAs.com or myself Marty.McCarthy@MCC-CPAs.com with questions. We are always happy to help.
Martin C. McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company, PC

Disclaimer This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).