IRS Publishes Special Per Diem Rates for 2024-2025

Supersedes Notice 2023-68

2024-2025 Special Per Diem Rates

SECTION 1. PURPOSE

This annual notice provides the 2024-2025 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. 2019-48, 2019-51 I.R.B. 1392 (or successor), 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. 2019-48 (or successor). Notice 2023-68, 2023-41 I.R.B. 1060, provides the rates and list of high-cost localities for the period October 1, 2023, to September 30, 2024.

SECTION 3. SPECIAL M&IE RATES FOR TRANSPORTATION INDUSTRY

The special M&IE rates for taxpayers in the transportation industry are $80 for any locality of travel in the continental United States (CONUS) and $86 for any locality of travel outside the continental United States (OCONUS). See section 4.04 of Rev. Proc. 2019-48 (or successor).

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. 2019-48 (or successor).

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 2023-68 (the per diem substantiation method) are $319 for travel to any high-cost locality and $225 for travel to any other locality within CONUS. The amount of the $319 high rate and $225 low rate that is treated as paid for meals for purposes of §274(n) is $86 for travel to any high-cost locality and $74 for travel to any other locality within CONUS. See section 5.02 of Rev. Proc. 2019-48 (or successor). The per diem rates in lieu of the rates described in Notice 2023-68 (the meal and incidental expenses only substantiation method) are $86 for travel to any high-cost locality and $74 for travel to any other locality within CONUS.

2. High-cost localities. The following localities have a federal per diem rate of $272 or more, and are high-cost localities for the specified portion of the calendar year:

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 2023-68.

a. The following localities have been added to the list of high-cost localities: Los Angeles, California; Mammoth Lakes, California; Palm Springs, California; South Lake Tahoe, California; Boise, Idaho; Coeur d'Alene, Idaho; Bend, Oregon; Burlington, Vermont.

b. The following localities have changed the portion of the year in which they are high-cost localities: Sedona, Arizona; Monterey, California; Napa, California; San Luis Obispo, California; Yosemite National Park, California; Aspen, Colorado; Silverthorne/Breckenridge, Colorado; Lewes, Delaware; District of Columbia (see also Maryland and Virginia); Boca Raton/Delray Beach/Jupiter, Florida; Fort Myers, Florida; Tampa/St. Petersburg, Florida; Vero Beach, Florida; Bar Harbor/Rockport, Maine; Portland, Maine; Ocean City, Maryland; Washington, D.C. Metropolitan Area in Maryland (counties of Montgomery and Prince George's); Falmouth, Massachusetts; Nantucket, Massachusetts; Petoskey, Michigan; Kalispell/Whitefish, Montana; Kill Devil Hills, North Carolina; Philadelphia, Pennsylvania; Moab, Utah; Washington, D.C. Metropolitan Area in Virginia (cities of Alexandria, Falls Church, and Fairfax; counties of Arlington and Fairfax); Seattle, Washington.

c. The following localities have been removed from the list of high-cost localities: Mill Valley/San Rafael/Novato, California; Oakland, California; San Mateo/Foster City/Belmont, California; Grand Lake, Colorado; Pensacola, Florida; Punta Gorda, Florida; Missoula, Montana; Carlsbad, New Mexico; Lincoln City, Oregon; Myrtle Beach, South Carolina; Cody, Wyoming.

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, 2024, for travel away from home on or after October 1, 2024. 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, 2024. See sections 4.06 and 5.04 of Rev. Proc. 2019-48 (or successor) for transition rules for the last 3 months of calendar year 2024.

SECTION 7. EFFECT ON OTHER DOCUMENTS

Notice 2023-68 is superseded.

DRAFTING INFORMATION

The principal author of this notice is C. Dylan Durham of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this notice, contact Mr. Durham at 202-317-7005 (not a toll-free call).