The IRS has announced updated per diem rates for business travel, effective October 1, 2026, through September 30, 2027. These new rates can help businesses simplify employee travel reimbursements, reduce paperwork, and better manage expenses.
What Are Per Diem Rates?
Per diem rates allow employers to reimburse employees for business travel expenses, including lodging, meals, and incidental costs, without requiring receipts for every expense.
Employees must still document the dates, locations, and business purposes of their travel. When reimbursements meet IRS accountable plan requirements, they generally aren’t considered taxable wages.
New IRS Per Diem Rates for 2026–2027
Under the IRS simplified high-low method, businesses can use two standard daily reimbursement rates for travel within the continental United States:
| Location | 2025–2026 | 2026–2027 |
|---|---|---|
| High-cost areas | $319 | $329 |
| All other areas | $225 | $230 |
The new daily rates include:
- High-cost areas: $243 for lodging and $86 for meals and incidental expenses.
- Other areas: $156 for lodging and $74 for meals and incidental expenses.
Certain destinations qualify as high-cost areas only during specific seasons.
Tax Benefits and Important Considerations
Using the IRS high-low per diem method can simplify expense reporting and help businesses establish predictable travel budgets.
However, employers should understand several important rules:
- Meal and incidental expense reimbursements are generally subject to a 50% business deduction limitation.
- The high-low method must generally be applied consistently for an employee’s domestic travel reimbursements.
- Employees who own 10% or more of the business cannot use the high-low method.
Is Your Business Travel Policy Up to Date?
With the new IRS per diem rates now in effect, it’s a good time to review your company’s travel reimbursement practices. Choosing the right approach can reduce administrative work, improve expense management, and help maintain tax compliance.
Hare CPAs can help! Our team can review your business travel reimbursement policy, explain the latest IRS requirements, and help determine which method best fits your business.
Contact Hare CPAs today to learn how these changes may affect your company.
