IRS Publishes Special Per Diem Rates for 2017-2018
Notice 2017-54; 2017-42 IRB 321
- Institutional AuthorsInternal Revenue Service
- Code Sections
- Subject Areas/Tax Topics
- Jurisdictions
- Tax Analysts Document Number2017-70971
- Tax Analysts Electronic Citation2017 TNT 185-312017 TPR 40-6
Superseded by Notice 2018-77
Supersedes Notice 2016-58
2017-2018 Special Per Diem Rates
SECTION 1. PURPOSE
This annual notice provides the 2017-2018 special per diem rates for taxpayers to use in substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home, specifically (1) the special transportation industry meal and incidental expenses (M&IE) rates, (2) the rate for the incidental expenses only deduction, and (3) the rates and list of high-cost localities for purposes of the high-low substantiation method.
SECTION 2. BACKGROUND
Rev. Proc. 2011-47, 2011-42 I.R.B. 520, provides rules for using a per diem rate to substantiate, under § 274(d) of the Internal Revenue Code and § 1.274-5 of the Income Tax Regulations, the amount of ordinary and necessary business expenses paid or incurred while traveling away from home. Taxpayers using the rates and list of high-cost localities provided in this notice must comply with Rev. Proc. 2011-47. Notice 2016-58, 2016-41 I.R.B. 438, provides the rates and list of high-cost localities for the period October 1, 2016, to September 30, 2017.
Section 3.02(3) of Rev. Proc. 2011-47 provides that the term “incidental expenses” has the same meaning as in the Federal Travel Regulations, 41 C.F.R. 300-3.1, and that future changes to the definition of incidental expenses in the Federal Travel Regulations would be announced in the annual per diem notice. Subsequent to the publication of Rev. Proc. 2011-47, the General Services Administration published final regulations revising the definition of incidental expenses under the Federal Travel Regulations to include only fees and tips given to porters, baggage carriers, hotel staff, and staff on ships. Transportation between places of lodging or business and places where meals are taken, and the mailing cost of filing travel vouchers and paying employer-sponsored charge card billings, are no longer included in incidental expenses. Accordingly, taxpayers using the per diem rates may separately deduct or be reimbursed for transportation and mailing expenses.
SECTION 3. SPECIAL M&IE RATES FOR TRANSPORTATION INDUSTRY
The special M&IE rates for taxpayers in the transportation industry are $63 for any locality of travel in the continental United States (CONUS) and $68 for any locality of travel outside the continental United States (OCONUS). See section 4.04 of Rev. Proc. 2011-47.
SECTION 4. RATE FOR INCIDENTAL EXPENSES ONLY DEDUCTION
The rate for any CONUS or OCONUS locality of travel for the incidental expenses only deduction is $5 per day. See section 4.05 of Rev. Proc. 2011-47.
SECTION 5. HIGH-LOW SUBSTANTIATION METHOD
1. Annual high-low rates. For purposes of the high-low substantiation method, the per diem rates in lieu of the rates described in Notice 2016-58 (the per diem substantiation method) are $284 for travel to any high-cost locality and $191 for travel to any other locality within CONUS. The amount of the $284 high rate and $191 low rate that is treated as paid for meals for purposes of § 274(n) is $68 for travel to any high- cost locality and $57 for travel to any other locality within CONUS. See section 5.02 of Rev. Proc. 2011-47. The per diem rates in lieu of the rates described in Notice 2016-58 (the meal and incidental expenses only substantiation method) are $68 for travel to any high-cost locality and $57 for travel to any other locality within CONUS.
2. High-cost localities. The following localities have a federal per diem rate of $238 or more, and are high-cost localities for all of the calendar year or the portion of the calendar year specified in parentheses under the key city name.
Key city | County or other defined location |
---|---|
California | |
Mill Valley/San Rafael/Novato | Marin |
Monterey | Monterey |
Napa | Napa |
Oakland | Alameda |
San Francisco | San Francisco |
San Mateo/Foster City/Belmont | San Mateo |
Santa Barbara | Santa Barbara |
Santa Monica | City limits of Santa Monica |
Sunnyvale/Palo Alto/San Jose | Santa Clara |
Colorado | |
Aspen | Pitkin |
Denver/Aurora | Denver, Adams, Arapahoe, and Jefferson |
Grand Lake | Grand |
Silverthorne/Breckenridge | Summit |
Steamboat Springs | Routt |
Telluride | San Miguel |
Vail | Eagle |
Delaware | |
Lewes | Sussex |
District of Columbia | |
Washington D.C. (also the cities of Alexandria, Falls Church, and Fairfax, and the counties of Arlington and Fairfax, in Virginia; and the counties of Montgomery and Prince George's in Maryland) (See also Maryland and Virginia) | |
Florida | |
Boca Raton/Delray Beach/Jupiter | Palm Beach and Hendry |
Fort Lauderdale | Broward |
Fort Meyers | Lee |
Fort Walton Beach/De Funiak Springs | Okaloosa and Walton |
Key West | Monroe |
Miami | Miami-Dade |
Naples | Collier |
Illinois | |
Chicago | Cook and Lake |
Maine | |
Bar Harbor | Hancock |
Maryland | |
Ocean City | Worcester |
Washington, DC Metro Area | Montgomery and Prince George’s |
Massachusetts | |
Boston/Cambridge | Suffolk, city of Cambridge |
Falmouth | City limits of Falmouth |
Hyannis | Barnstable less the city of Falmouth |
Martha's Vineyard | Dukes |
Nantucket | Nantucket |
Michigan | |
Petoskey | Emmet |
Traverse City/Leland | Grand Traverse and Leelanau |
New York | |
Lake Placid | Essex |
New York City | Bronx, Kings, New York, Queens, and Richmond |
Saratoga and Schenectady | Saratoga Springs/Schenectady |
Oregon | |
Portland | Multnomah |
Seaside | Clatsop |
Pennsylvania | |
Hershey | Hershey |
Philadelphia | Philadelphia |
Rhode Island | |
Jamestown/Middletown/Newport | Newport |
South Carolina | |
Charleston | Charleston, Berkeley and Dorchester |
Utah | |
Park City | Summit |
Virginia | |
Virginia Beach | City of Virginia Beach |
Wallops Island | Accomack |
Washington, DC Metro Area | Cities of Alexandria, Fairfax, and Falls Church; counties of Arlington and Fairfax |
Washington | |
Seattle | King |
Vancouver | Clark, Cowlitz, and Skamania |
Wyoming | |
Jackson/Pinedale | Teton and Sublette |
3. Changes in high-cost localities. The list of high-cost localities in this notice differs from the list of high-cost localities in section 5 of Notice 2016-58.
a. The following localities have been added to the list of high-cost localities: Oakland, California; Lewes, Delaware; Fort Myers, Florida; Hyannis, Massachusetts; Petoskey, Michigan; Portland, Oregon; Vancouver, Washington.
b. The following localities have changed the portion of the year in which they are high-cost localities: Aspen, Colorado; Denver/Aurora, Colorado; Telluride, Colorado; Vail, Colorado; Bar Harbor, Maine; Ocean City, Maryland; Nantucket, Massachusetts; Philadelphia, Pennsylvania; Jamestown/Middletown/Newport, Rhode Island; Jackson/Pinedale, Wyoming.
c. The following localities have been removed from the list of high-cost localities: Sedona, Arizona; Los Angeles, California; Vero Beach, Florida; Kill Devil, North Carolina.
SECTION 6. EFFECTIVE DATE
This notice is effective for per diem allowances for lodging, meal and incidental expenses, or for meal and incidental expenses only, that are paid to any employee on or after October 1, 2017, for travel away from home on or after October 1, 2017. For purposes of computing the amount allowable as a deduction for travel away from home, this notice is effective for meal and incidental expenses or for incidental expenses only paid or incurred on or after October 1, 2017. See sections 4.06 and 5.04 of Rev. Proc. 2011-47 for transition rules for the last 3 months of calendar year 2017.
SECTION 7. EFFECT ON OTHER DOCUMENTS
Notice 2016-58 is superseded.
DRAFTING INFORMATION
The principal author of this notice is Elizabeth Binder of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this notice contact Ms. Binder at (202) 317-7005 (not a toll-free call).
- Institutional AuthorsInternal Revenue Service
- Code Sections
- Subject Areas/Tax Topics
- Jurisdictions
- Tax Analysts Document Number2017-70971
- Tax Analysts Electronic Citation2017 TNT 185-312017 TPR 40-6