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Per Diem Allowance for Lodging Plus Meals and Incidental Expenses (M&IE)

October 14, 2022

Under the lodging plus meals and incidental expenses (M&IE) per diem method, the amount of an employee’s or other payee's reimbursed expenses that is deemed substantiated (for purposes of the employer's deduction) is equal to the lesser of the employer's per diem allowance or the federal per diem amount for the locality of travel for the period in which the employee is away from home. The employee is not required to submit lodging receipts if per diem allowances are used to substantiate such expenses. The locality of travel is the place where the employee stops for sleep or rest. Employees and self-employed individuals may use the applicable federal M&IE rate to determine their allowable deductions for unreimbursed M&IE while away from home. Unreimbursed lodging costs must be substantiated by the required records.

The M&IE rate must be prorated for partial days of travel away from home. If an employee works from home but meals are provided by the employer, the employee may only deduct the incidental expense portion of the applicable federal per diem M&IE rates.

Per Diem Rates

The federal per diem rate for lodging plus M&IE depends on the region in which you are traveling. For the various regions within the continental United States (the 48 contiguous states plus the District of Columbia) (CONUS), the federal per diem rate for a region is equal to the sum of a maximum lodging amount and the M&IE rate for that region. Federal per diem rates are also established for areas outside the continental United States (OCONUS), such as Alaska, Hawaii, Puerto Rico, and U.S. possessions. Rates are also established for international travel (foreign OCONUS).

Rates for CONUS, OCONUS, and international travel are published under the Federal Travel Regulations for government travel and are updated periodically. The travel rates are issued to coincide with the government's fiscal year of October to September.

High-Low Method

Instead of using the maximum per diem rates from the CONUS table, taxpayers can compute per diem allowances for travel within the continental United States under the high-low method, which is a simplified method for determining a lodging plus M&IE per diem. This method divides all CONUS localities into two categories: low-cost or high-cost regions.

For travel on or after October 1, 2021, through September 30, 2022, the lodging and M&IE per diem rates for the high-cost and low-cost localities are as follows:

For travel on or after October 1, 2022, through September 30, 2023, the lodging and M&IE per diem rates for the high-cost and low-cost localities are as follows:

Some areas are treated as high-cost during certain periods of the year (for example, peak tourist season) and as low-cost during other periods. Thus, an employer who uses the high-low method must determine whether a location was high-cost or low-cost during the period of the employee’s travel.

A payor that uses the high-low method for an employee payor may not use the actual federal maximum per diem rates for that employee during the calendar year for travel within CONUS. For travel outside CONUS the employer may use the applicable federal OCONUS rates, the M&IE-only rate, or reimbursement of actual expenses.

Proration of M&IE Allowance.

If an individual is traveling away from home for only a part of the day, two alternative methods may be used to prorate the per diem rate or the M&IE rate. Under the first method, 75 percent of the M&IE rate (or the M&IE portion of the per diem rate) is allowed for each partial day during which an employee or self-employed individual is traveling on business. Under the second method, referred to as the reasonable business practice method, the M&IE rate may be prorated using any method that is consistently applied and in accordance with reasonable business practice. For example, if an employee travels from 9 a.m. one day until 5 p.m. the next day, a proration method that gives an amount equal to two times the M&IE rate is in accordance with reasonable business practice.

Employees and Self-Employed Persons

An employee or self-employed individual whose expenses are not reimbursed may also use the M&IE-only rate to substantiate M&IEs while traveling away from home. In this case, the taxpayer must prove the actual time, place, business purpose, and lodging expenses of the travel by appropriate records sufficient supporting evidence.

Optional Method for Incidental-Expenses-Only Deduction

Taxpayers may use an optional method to deduct only incidental expenses in lieu of using actual expenses. A taxpayer who does not incur any meal expenses may deduct $5 per calendar day (or partial day) as ordinary and necessary incidental expenses paid or incurred while traveling to any localities within the continental United States (CONUS) or outside the continental United States (OCONUS). The optional method is subject to the proration rules for partial days and substantiation requirements for taxpayers who use the per diem method for substantiation. Taxpayers using the lodging plus M&IE per diem method, the M&IE-only method, or the high-low method and the optional M&IE-only method are not eligible to use the optional incidental expense only method.

Transportation Workers.

The M&IE rates for travel away from home on or after October 1, 2022, for both self-employed persons and employees in the transportation industry are $69 for CONUS localities, and $74 for OCONUS localities. To be in the transportation industry, an individual's work must:

1. be directly involve moving people or goods by airplane, barge, bus, ship, train, or truck

2. regularly require travel away from home to localities with differing federal M&IE rates during a single trip

Under a calendar-year convention for the transportation industry, a taxpayer who used the federal M&IE rates during the first nine months of calendar year 2022 to substantiate an individual's travel expenses may not use the special transportation industry rates for that individual until January 1, 2023.

Transition Rules

Taxpayers may continue to use the per diem rates effective prior to October 1, 2022, for the remainder of 2022, or they may begin to use the new per diem rates for reimbursement for travel, so long as they use either the pre-October 1 rates or the updated rates for the October 1 through December 31 period consistently. Taxpayers who used the per diem method or the high-low substantiation method to reimburse travel expenses during the first nine months of calendar-year 2022 must continue to use that method for the remainder of calendar-year 2022. Taxpayers who use the high-low method during the first nine months of calendar-year 2022 may either continue to use the rates and localities in effect before October 1, 2022 or use the updated rates and localities in effect for travel on and after October 1, 2022, as long as they use the same rates and localities consistently for all employees reimbursed under the high-low method.


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