IRS updates per diem rates for business travelers for 2022-2023

Accounting

The Internal Revenue Service issued its annual notice providing the 2022-2023 special per diem rates for taxpayers to use in substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home.

Notice 2022-44, released Monday by the IRS, provides the special per diem rates effective Oct. 1, 2022, that taxpayers can use to substantiate the amount of expenses for lodging, meals, and incidental expenses when traveling away from home. 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.

Use of a per diem substantiation method isn’t mandatory, the IRS noted. Taxpayers can substantiate their actual allowable expenses if they maintain adequate records or other evidence for proper substantiation.

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The special meal and incidental expense rates for taxpayers in the transportation industry are $69 for any locality of travel in the continental U.S. and $74 for any locality of travel outside the continental U.S. The rate for any locality of travel either inside or outside the continental U.S. for the incidental expenses only deduction is $5 per day. These rates are in line with the rates announced last year (see story).

For purposes of the high-low substantiation method, the per diem rates in lieu of the rates described last year are $297 for travel to any high-cost locality and $204 for travel to any other locality within the continental U.S. (Last year, the rates were nearly identical, at $296 for travel to any high-cost locality and $202 for travel to any other locality within the continental U.S.) 

The amount of the $297 high rate and the $204 low rate that’s treated as paid for meals is $74 for travel to any high-cost locality and $64 for travel to any other locality within the continental U.S. The per diem rates in lieu of the rates described in last year’s notice are, again, $74 for travel to any high-cost locality and $64 for travel to any other locality within the continental U.S. 

The notice goes on to provide a list of cities that have a federal per diem rate of $250 or more, and are considered to be high-cost localities for this portion of the year.

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