In late September, the IRS issued its annual rate updates for per diem business travel expenses. These rates are often used by companies in lieu of reimbursing employees for their actual travel (lodging, meals and incidental) expenses. This flat “per diem” rate is considered an alternative and acceptable method for reimbursing employees for business related travel expenses. The new rates issued in IRS Notice 2013-65 includes information on transportation industry meal and incidental expenses, incidental expense only deduction and a revised list and rates of high cost localities for purposes of the high-low substantiation method. It’s important to note the new rates became effective October 1, 2013.
Key Changes to Per Diem Rates
Below is a summary of the most notable changes in the 2014 update including:
- Lodging Rate Increase – The standard lodging rate for travel within the continental U.S. has been increased by $6 to $83 per night. The changes to the non-standard rates for lodging vary depending on market changes for the cities and locations listed in the notice. It’s important to note that for all locations in the continental U.S. not specifically listed the per diem lodging rate is $83.
- Changing Incidental Expenses – New for 2014, expenses for travel between places of business and lodging, between business and dining locations, cost of filing travel vouchers and paying employer sponsored charge card billings are no longer considered incidental expenses. This means incidental expenses are limited to tips given to porters, hotel staff and ship staff (where appropriate).
- Incidental Only Deduction – The per diem rate for the incidental expenses only deduction remains unchanged from 2103 at $5 per day of travel for any travel location (inside or outside the United States).
- Transportation Industry Rates – This year there were specific updates pertaining to those in the transportation industry. This includes $59 for any travel within the continental United States and $65 for travel to any location outside the United States (unchanged from 2013).
Do you have questions about the new per diem rates? Unsure how your company will be impacted? Contact us today. For additional information, please contact us at 302.225.0600 or firstname.lastname@example.org.